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Report Home Utility Furnishing Products

Report Home Utility Furnishing Products

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Sections

  • Executive Summary
  • E.1. India – a preferred destination for International Business
  • E.2. Furniture Industry in India
  • E.3. Indian Décor and Handicrafts Industry
  • E.4. Understanding the Value Chain of Furnishing Industry
  • E.4.1. Furniture Industry Value Chain
  • E.4.2. Décor and Handicrafts Industry Value Chain
  • E.5. Industry Analysis
  • E.5.1. Furniture Industry Analysis
  • E.5.2. SWOT Analysis of Décor and Handicrafts Industry
  • E.6. Consumer Insights
  • E.7. Recommendations for Thai Investors
  • 1. Global Furniture and Handicrafts & Décor Industry
  • 1.1. Global Furniture Industry
  • 1.1.1. Overview:
  • 1.1.2. The main furniture exporting countries
  • 1.2. Global Crafts and Decorative Industry
  • 1.2.1. Overview
  • 1.2.2. Major Importing Nations
  • 1.2.3. Major Exporting Nations
  • 1.2.4. Segmentation – Exporting Nations
  • 2. INDIA – Important Trends in Indian Economy
  • 3. Furniture and Handicrafts & Décor Industry in India
  • 3.1. Furniture Industry
  • 3.1.1. Overview:
  • 3.1.2. Industry Segmentation
  • 3.1.3. Industry Growth Trends and Forecasts
  • 3.1.4. Key Demand Drivers of the Furniture Industry
  • 3.2. Indian Handicrafts and Decorative Industry
  • 3.2.1. Overview
  • 3.2.2. Classification / Segmentation of the Industry:
  • 3.2.3. Handicrafts Clusters in India
  • 3.2.4. Challenges in the Indian Handicrafts and Décor Industry
  • 4. Understanding the Value Chain
  • 4.1. Furniture Industry Value Chain
  • 4.1.1. Imports
  • 4.1.2. Domestically Manufactured Furniture
  • 4.1.3. Distribution Structure
  • 4.1.4. Furniture Industry and Organized Retailing
  • 4.2. Handicrafts & Décor Products Value Chain
  • 5. Industry Analysis
  • 5.1. Indian Furniture Industry Analysis – Five Forces Model
  • 5.1.1. Bargaining power of Suppliers
  • 5.1.2. Bargaining power of Customers
  • 5.1.3. Competitive Rivalry
  • 5.1.4. Threat of Substitutes
  • 5.1.5. Threat of New Entrants
  • 5.2. Indian Handicrafts & Décor Industry – SWOT Analysis
  • 6. Consumer Insights
  • 6.1. Respondents Profile
  • 6.2. Purchase Decision Process – An Introduction
  • 6.2.1. Problem Recognition / Need Awareness Stage
  • 6.2.2. Information Search
  • 6.2.3. Evaluation of Alternatives
  • 6.2.4. Purchase Decision
  • 6.2.5 Post-Purchase Evaluation
  • 6.3. Customers’ Perceptions about Thailand
  • 7. Recommendations for Thai Investors
  • 7.1. How to Enter the Four Market Segments
  • 7.1.1. Entry Options
  • 7.1.2. Distribution
  • 7.1.3. Brand Building & Promotion
  • 7.2. Market Attractiveness
  • 8. Annexure
  • 8.1. Annexure A: Profile of Major Players in the organized sector of Indian
  • 8.1.1. Style Spa
  • 8.1.2. Godrej Interio
  • 8.1.3. Durian
  • 8.2. Wooden Handicrafts Industry – Overview
  • 8.2.1. Role of Wooden Handicrafts Industry in Indian Economy
  • 8.2.2. Factors That Affect Growth
  • E.1. Tableware Industry in India
  • E.2. Plastic Container Industry in India
  • E.3. Value Chain – Tableware & Plastic Container Industry
  • E.3.1. Value Chain for Manufacturers –
  • E.3.2. Value Chain for Importers –
  • E.4. Industry Analysis
  • E.4.1. Tableware Industry
  • E.4.2. Plastic Container Industry
  • E.5. Consumer Insights
  • E.6. Market Attractiveness of Tableware & Plastic Container Industry
  • E.7. Recommendations
  • 9. Global Scenario
  • 9.1 Global Tableware Industry:
  • 9.1.1 Overview:
  • 9.1.2 The Changing Consumers
  • 9.2. Global Plastic Products Industry
  • 9.2.1. Plastic Industry
  • 9.2.2 Plastic containers
  • 10. Tableware & Plastic storage containers Industry in India
  • 10.1. Tableware Industry
  • 10.1.2. Industry Segmentation
  • 10.1.3. Customer classification
  • 10.1.4. Major manufacturers in India
  • 10.1.5. Growth Drivers for Tableware Industry
  • 10.1.6. Analysis of Tableware Industry in India
  • 10.1.7. Critical Success Factors for Tableware Industry
  • 10.2. Plastic Containers Industry in India
  • 10.2.1 Overview
  • 10.2.2 Industry Segmentation
  • 10.2.3. Customer classification
  • 10.2.4. Major manufacturers in India
  • 10.2.5. Growth Drivers for Plastic storage containers Industry
  • 10.2.6. Analysis of Plastic storage containers market in India
  • 10.2.7. Strengths and the weaknesses of the industry
  • 10.2.8. Critical Success Factors for Plastic storage containers
  • 11. Imports structure in Indian Tableware & Plastic containers
  • 11.1. Overview
  • 11.2 Current Import Duty Structure
  • 11.3. Major brands being imported in Indian tableware market
  • 11.4. Major brands being imported in Indian Plastic containers market
  • 11.5. Channel Structure for Importers
  • 12. Understanding the Value Chain
  • 12.1. Value Chain of Tableware Industry
  • 12.1.1.Case study for Tableware: Value chain of La Opala RG Ltd
  • 12.2. Value Chain of Plastic Containers Industry
  • 12.2.1. Case study for Plastic containers: Value chain of Cello Thermoware Ltd
  • 13. Consumer Insights
  • 13.1. Overview
  • 13.2. Customer Purchase process
  • 14. Conclusion
  • 14.1. Market Attractiveness
  • 15. Recommendations
  • 15.1. Entry Strategy
  • 15.2. Positioning of Tableware & Plastic storage containers
  • 15.3. Target Product Categories
  • 15.4. Target Customers
  • 15.5. Distribution
  • 15.6. Brand building & Promotion
  • 15.7. Value Chain
  • 16. Annexure
  • 16.1. Profile of major players in tableware category
  • 16.1.1 La Opala
  • 16.1.2 Yera
  • 16.1.3. Bharat Pottery Ltd
  • 16.1.4. Art d’ inox
  • 16.1.5. Magppie
  • 16.2. Profile of major players in Plastic storage container category
  • 16.2.1 Cello
  • 16.2.2. Tupperware
  • 16.2.3. Hamilton
  • 16.3. Import Legislation in India
  • 16.3.1. Principal Law & Import Export Policy
  • 16.3.2. Mode of Pricing and INCO TERMS
  • 16.3.3. Customs Duty
  • 17. References

INVESTMENT POTENTIAL STUDY INDIAN HOME UTILITY & FURNISHING INDUSTRY

Prepared By:

,
February 2009

IMRB International

January 1, 2008

Prepared For:

Preface
Thai-Indian business relations have improved considerably over the past decade. Thailand and India are close to concluding a Free Trade Agreement (FTA) covering trade in goods by 2010. The Free Trade Agreement between Thailand and India is expected to improve trade relations between the two countries further. The FTA covering trade in goods would lead to long term mutual benefits in trade and investment and the partnership would be expanded further to cover technology knowledge and expertise India's primary imports from Thailand are machinery, electronic appliances, textiles, plastic material, transport equipment, vegetable oil and latex. The major items of imports under FTA are polycarbonate, cathode-ray tubes, color-TVs, air conditioners and Aluminum products. Thailand‘s main imports from India are jewelry, gemstones, steel, pharmaceuticals and ferrous metal ores. India's trade with Thailand could touch USD 7 billion by 2010-11 propelled by a doubling in transaction under Free Trade Agreement (FTA). The EHS was implemented on September 1, 2004, under which tariffs on 82 items were to be phased out by September 1, 2006 by both the sides. The trade between Thailand and India is estimated to be US $ 7 billion by 2010-11 from US $ 2.2 billion in 2005-06. The total trade of 82 items under Early Harvest Scheme (EHS) of the FTA was increased by over 140 percent to about US $ 358.63 million in 2005-06 from US $ 149 million in 2003-04. The share of these 82 items in India-Thailand trade increased from 10.34 percent in 2003-04 to 15.68 percent in 2005-06. Thailand‘s export to India of the identified 82 EHS items was increased from US $ 84.64 million to US $ 275 million during the period from 2003 – 04 to 2005 – 06. During the same time, India‘s export to Thailand of these items increased from US $ 64.28 million to US $ 83.03 million during the same period.

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

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In 2007, Thailand‘s export for these 82 items was US $ 406.31 million. Due the FTA between two countries, Thailand is able to manage the trade surplus of US $ 598 in 2007 in bilateral trade between Thailand and India. With significant potential for growth of business between the two countries, the Ministry of Commerce, Thailand and Royal Thai Embassy would like to understand the investment potential across the following identified product categories:1. Home Utility and Furnishing: This would broadly include three product categories:a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set, Dining table, Corner / corner table etc. Also covering office furniture e.g. office chairs, cubicles, tables etc and open-air furniture i.e. the furniture used in the garden, near pools etc b. Interior Decoration items – This would include Showpieces, Wooden handicraft, photo frames, and artificial flowers. c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering) Segment, Institutional / Office d. Plastic Products - Food containers, plastic storage boxes etc e.g. Cello, Tupperware, Milton, Nyasa etc 2. Construction Material: This would include Bathroom Fittings, Tiles/Floorings (including wooden), Roof Tiles (used in the costal areas), Metal (Al, Tin etc) / Gypsum boards used for partition 3. Hospitality Services: This would be understood with the objective of tie-up with existing hotels – spas, specialty restaurant (e.g. Thai cuisine restaurant), health wellness services etc. The client would be interested in management control and running the property. The stand-alone spas e.g. Kaya clinic is also covered in the purview of the study. 4. Auto parts and accessories: It would cover both types of auto parts:-

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

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b. moulding etc) and 4-wheelers – both cars and commercial vehicles.g. Accessories / decorative items e. gear box.a. Report for each of the above-mentioned product categories shall be submitted separately in four different modules. These parts would be for 2-wheelers (e.g. the Ministry of Commerce. Given the similarity and overlap in couple of these product categories. music systems.g. clutch plates etc and high volume low value items like break pads etc). Interior Decoration items. Essential auto parts (low volume high value items e. This report is for Home utility and furnishing segment that includes Furniture. this report is divided and presented in two parts as follows: 1. Thailand and Royal Thai Embassy has commissioned Business and Industrial Research Division (BIRD) of IMRB International to avail its research based consultancy services. alloy wheels etc In order to understand the trade potential across the above categories. Module 2 – Home Utility (Utensils and Plastic Products) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -3- . Module 1 – Home Furnishing (Furniture & Interior Decoration) 2. Utensils and Plastic Products.

.2..... 21 1.....................5.................................................... Furniture and Handicrafts & Décor Industry in India........ 16 1..............................................................3..............4....................2.... The main furniture exporting countries ..2... 27 3...................5............. Understanding the Value Chain of Furnishing Industry. Overview: ..... SWOT Analysis of Décor and Handicrafts Industry......................................... 15 E..................... 13 E.... Consumer Insights .1........................................................ 27 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -4- ................... 22 1............................................................................................... Furniture Industry Analysis................................... Segmentation – Exporting Nations .............................................................................. 13 E.........2.................4.............................................3.....27 3.................................................................... Global Furniture and Handicrafts & Décor Industry ...........................1......................................................... 18 1.................................................. Overview: ..........................1.......................................................................................4................................. 13 E.........................1.....................1....................................................................................................... Furniture Industry in India...... 18 1....................2. Major Importing Nations .........................................2........ Major Exporting Nations .............................................1.........5............ 20 1................................................ 11 E.....................................................1.............................................................2.........7.......1............ 23 2..............2........................................ Industry Analysis .2. Furniture Industry Value Chain ...........1..........4........................................ Furniture Industry ...............1..................... 14 E.............. 21 1........ Overview .......................................24 3..... India – a preferred destination for International Business ........................................... Global Furniture Industry .... Recommendations for Thai Investors ..TABLE OF CONTENTS MODULE 1 – Furniture & Decorative Items Industry of India Executive Summary .........................2... 12 E..................................... Indian Décor and Handicrafts Industry ............ 11 E.............................................1..................................................................... 21 1......18 1.............................................................. 14 E...........11 E............. 14 E........6................................................. INDIA – Important Trends in Indian Economy .................. Global Crafts and Decorative Industry ............... Décor and Handicrafts Industry Value Chain ........

..................3. 37 4...................... Indian Handicrafts & Décor Industry – SWOT Analysis ...........................................2.................................................................................................................. 46 5.... 38 4.. 48 5..................2...... 50 6........... 52 6............3......................... 53 6. Challenges in the Indian Handicrafts and Décor Industry .................................................................................... 30 3..........2...... Handicrafts Clusters in India .1.......................................................1.1............... Problem Recognition / Need Awareness Stage .. Purchase Decision Process – An Introduction ..........2..........4..............................................................................................................................2.....1...................................................... Evaluation of Alternatives .........4.............................................. 33 3................... Industry Analysis ...............................................................................2...2.........................................................1............................ 27 3..............1...45 5..........................4.............3.......2... 46 5.............. 60 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -5- .......1....... 45 5........................................... Distribution Structure ..............................................1..................................................................1....................2...................... Industry Growth Trends and Forecasts ......................1.... Threat of Substitutes ....................... Furniture Industry and Organized Retailing ........................... 47 5..................1.................. Information Search ............................ Indian Furniture Industry Analysis – Five Forces Model ........................2................................................................. Bargaining power of Customers .................................... 31 3..............1..... 35 4........ Competitive Rivalry ................... Purchase Decision.............5................ Imports ............2... 29 3.....................1...1.......... 55 6................... 32 3.... 57 6.................. Industry Segmentation .......................................... Overview ........................................................3........... Key Demand Drivers of the Furniture Industry.........................52 6..... Respondents Profile ........ 54 6.......... Furniture Industry Value Chain ......................................... 47 5... Domestically Manufactured Furniture........ Handicrafts & Décor Products Value Chain .............................................................. 31 3................ 34 4.... Classification / Segmentation of the Industry: ..................................................................................... 43 5................................... Threat of New Entrants................................................. Indian Handicrafts and Decorative Industry .4..... Bargaining power of Suppliers .................... 35 4..................1.............2...............2.....1.........................................................2................3.........2....... 41 4.................................................................. Consumer Insights ...1...................................................................2..............................2.....35 4....1.......4......1.......................3. Understanding the Value Chain .........................................................................................................................

. Market Attractiveness of Tableware & Plastic Container Industry........71 8........3...............................................................................2............5 Post-Purchase Evaluation .................. Customers‘ Perceptions about Thailand .2........................ 80 E................................. Recommendations ............. 81 E...........................1......1. Value Chain for Importers – .........................1................. 71 8................................................................................................................ Market Attractiveness ....................................2...............................................4............. Durian ................................................. Recommendations for Thai Investors ....................... 62 6........................... 68 7.. Distribution ...... 65 7......1..........3............................... Industry Analysis ..........................................................5...... Role of Wooden Handicrafts Industry in Indian Economy ......1......................... How to Enter the Four Market Segments .........................1......... 72 8.................2.....2.... Value Chain for Manufacturers – .............. Brand Building & Promotion ... 81 E................................................ 84 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY -6- ... Tableware Industry in India.............................. Entry Options ............. Consumer Insights .................................................... Plastic Container Industry in India .......4..........................................3....3...... 81 E......... Plastic Container Industry ............1................................3........... 80 E........................78 E.....................65 7..................................... 82 E......................................................2..................... 64 7................................................... Godrej Interio ..................................... 83 E........... 75 8............................................................................................ 76 Executive Summary . 66 7..................................................................1..............................................................................2.....2............................ 78 E................. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 71 8..........1................................ 69 7.............................................. Style Spa ..... Wooden Handicrafts Industry – Overview ..................................................... Value Chain – Tableware & Plastic Container Industry ............................1........6..........................1..............................................................................7.....3....................................................................................................2.......................................................................................................................... Factors That Affect Growth ...... 82 E............................ 79 E.................4.................. 75 8........1....1.........................1...... 73 8................................................................6...................................................................................... Tableware Industry........................ 70 8........................2......................................................................2................... Annexure ........

9. Global Scenario ..................................................................................................86
9.1 Global Tableware Industry: .................................................................................................... 86 9.1.1 Overview: ..................................................................................................................... 86 9.1.2 The Changing Consumers ............................................................................................ 86 9.2. Global Plastic Products Industry............................................................................................ 88 9.2.1. Plastic Industry ............................................................................................................ 88 9.2.2 Plastic containers .......................................................................................................... 88

10. Tableware & Plastic storage containers Industry in India ..........................89
10.1. Tableware Industry .............................................................................................................. 89 10.1.2. Industry Segmentation ............................................................................................... 89 10.1.3. Customer classification.............................................................................................. 92 10.1.4. Major manufacturers in India .................................................................................... 93 10.1.5. Growth Drivers for Tableware Industry .................................................................... 93 10.1.6. Analysis of Tableware Industry in India ................................................................... 96 10.1.7. Critical Success Factors for Tableware Industry ....................................................... 98 10.2. Plastic Containers Industry in India ..................................................................................... 99 10.2.1 Overview .................................................................................................................... 99 10.2.2 Industry Segmentation .............................................................................................. 101 10.2.3. Customer classification............................................................................................ 102 10.2.4. Major manufacturers in India .................................................................................. 102 10.2.5. Growth Drivers for Plastic storage containers Industry .......................................... 103 10.2.6. Analysis of Plastic storage containers market in India ............................................ 103 10.2.6. Analysis of Plastic storage containers market in India ............................................ 104 10.2.7. Strengths and the weaknesses of the industry ......................................................... 106 10.2.8. Critical Success Factors for Plastic storage containers ........................................... 107

11. Imports structure in Indian Tableware & Plastic containers market ......108
11.1. Overview ............................................................................................................................ 108 11.2 Current Import Duty Structure ............................................................................................ 108 11.3. Major brands being imported in Indian tableware market ................................................. 108 11.4. Major brands being imported in Indian Plastic containers market .................................... 109

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11.5. Channel Structure for Importers ........................................................................................ 109

12. Understanding the Value Chain ...................................................................111
12.1. Value Chain of Tableware Industry ................................................................................... 111 12.1.1.Case study for Tableware: Value chain of La Opala RG Ltd. .................................. 111 12.2. Value Chain of Plastic Containers Industry ....................................................................... 112 12.2.1. Case study for Plastic containers: Value chain of Cello Thermoware Ltd. ............. 113

13. Consumer Insights .........................................................................................115
13.1. Overview ............................................................................................................................ 115 13.2. Customer Purchase process................................................................................................ 115

14. Conclusion ......................................................................................................121
14.1. Market Attractiveness ........................................................................................................ 121

15. Recommendations ..........................................................................................122
15.1. Entry Strategy .................................................................................................................... 122 15.2. Positioning of Tableware & Plastic storage containers ..................................................... 123 15.3. Target Product Categories.................................................................................................. 123 15.4. Target Customers ............................................................................................................... 124 15.5. Distribution ........................................................................................................................ 124 15.6. Brand building & Promotion ............................................................................................. 125 15.7. Value Chain ....................................................................................................................... 125

16. Annexure .........................................................................................................126
16.1. Profile of major players in tableware category .................................................................. 126 16.1.1 La Opala ................................................................................................................... 126 16.1.2 Yera .......................................................................................................................... 127 16.1.3. Bharat Pottery Ltd. .................................................................................................. 128 16.1.4. Art d‘ inox ............................................................................................................... 129 16.1.5. Magppie ................................................................................................................... 130

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16.2. Profile of major players in Plastic storage container category .......................................... 130 16.2.1 Cello.......................................................................................................................... 130 16.2.2. Tupperware .............................................................................................................. 131 16.2.3. Hamilton .................................................................................................................. 132 16.3. Import Legislation in India ................................................................................................ 134 16.3.1. Principal Law & Import Export Policy.................................................................... 134 16.3.2. Mode of Pricing and INCO TERMS ....................................................................... 134 16.3.3. Customs Duty .......................................................................................................... 135

17. References .......................................................................................................137

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INVESTMENT POTENTIAL STUDY FURNITURE AND DECORATIVE ITEMS INDUSTRY OF INDIA INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY .MODULE 1 .10 - .

fast growing middle class with rising income levels and majority of Indian population falling in below 34 years of age. 15% Industry Segments Household. is growing only at a rate of 5 to 6 percent. which accounts to 10 percent of the total market. 20% Contract. Industry Segmentation – The furniture industry can be segmented into the following three categories:1. This figure is growing at 30% for the last few years.Executive Summary E. Some of the major changes and recent trends that have given strength to Indian economy include India joining the trillion-dollar GDP club. 65% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 11 . India – a preferred destination for International Business India has undergone tremendous economic Rising consumption development in last few decades. as experts opine. In terms of value. These trends along with the growth in sectors like real estate have a significant positive impact on the Furnishing Industry in India. Almost 80% of real estate developed in India is residential space and the rest comprise of Office.2. E. the unorganized sector.1. However. Household segment – The size of the overall real estate industry in India is estimated to be around US$ 12 billion (Source: FICCI). The organized sector. Furniture Industry in India The Indian furniture industry is fragmented in nature with many small players. has contributed significantly to the overall industry growth by witnessing significantly higher growth rate between 17 and 20 percent. this industry is worth INR 350 billion (2007-08) maintaining a growth rate of 10 percent. India has now become one of the most Rising income Multiplier effect GDP growth Rising production favored destinations for international businesses to expand. Considering the fast growing and barely tapped middle class market.

About 25 per cent of the urban middle class populations live in homes with five rooms or more. high ratio of value addition. As per the World Travel Market‘s Global Report 2008. Office segment – In line with the growth in the Indian economy and subsequent demand for office space. Other than these factors. lack INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 12 . Contract segment – It primarily caters to hotels and its growth is consequently linked to growth in tourism and development of new hotels. 3. The consistent growth in the Indian economy and rising living standards are the key factors driving the demand of the Indian furniture industry. real estate growth. this segment has witnessed good growth at a compounded annual growth rate of 20%. However. The thrust on real estate and office construction is expected to sustain in the near future. hotels and hospitals.3. major share is the middle class population of India. E. Indian Décor and Handicrafts Industry The handicraft industry employs seventy million people in India. out of which a significant proportion (close to INR 90 billion) is exported. The Indian handicrafts industry. diversified product portfolio. The growth of hotel industry in India can be attributed to the recent growth in the service industry and economy as a whole. cheap and skilled labor. growth in the organized retail industry. which has a status of cottage industry. high potential for export and foreign exchange earnings and flexible production. scope for new tourism development could be seen notably in emerging economic giants India and China. indicating continued growth for the furniture industry. Within the household segment. increasing affluence of Indian consumers and growth in hospitality and tourism industry of India have significant influence on the industry demand. has grown at a promising rate of 15 to 20 percent in the last few years. albeit slow down in global economy. shopping malls. which are likely to remain a strategic priority as growth is predicted to be robust. while 45 per cent live in houses with three rooms or less. The industry production is estimated to be worth INR 210 billion (2007-08). 2.office. The few important features of Indian handicraft and decorative industry are low capital investment.

Furniture Industry Value Chain The value chain of the Indian furniture industry can be divided under two broad categories – imported furniture and domestically manufactured furniture. The channel flow across these two categories is summarized in respective charts below. ethnic products of the decorative type is the large  Most common channel  Carry variety of product categories under one shop E – Retailers  In recent times. Understanding the Value Chain of Furnishing Industry E.4. Décor and Handicrafts Industry Value Chain The handicraft industry supply chain of India (shown in the adjoining figure) largely consists Importers / Wholesalers Producers of importers and wholesalers who supply goods to retailers and small chains. lack of awareness of international and new trends and poor promotional campaigns are a few drawbacks that need to be addressed.4. The most popular channel for distribution of the more Small Retailers Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers Final Point of Sale traditional. E.4.2.1.of infrastructure & technological support. internet has emerged as a major distribution channel for décor items handicrafts items INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 13 . Franchisee Manufacturers Imports Own Stores Distributor s Importers Distributor s Franchisee Retailers Imported Furniture Value Chain Domestically Manufactured Furniture Value Chain Raw Material Suppliers Manufacturers Own Stores Distributor Raw Material Imports s E.

1. comprising of many small and unorganized players. However.low costs. In view of this market scenario. industry has witnesses a rapid growth in the organized segment. The summary of the analysis is as follows: The furniture industry is fragmented in nature. Industry Analysis E. The suppliers are also not in a position to bargain much with the manufacturers due to the domestic availability and easier imports of raw material. weaknesses. This provides an attractive opportunity for Thai companies to enter the organized sector of Indian furniture industry.5. due to growing demand and initial stage of organized sector growth.number of small and independent retail stores. SWOT Analysis of Décor and Handicrafts Industry The strength factors like low barriers of new entry. The industry is vulnerable to new players with factors like increasing demand. Furniture Industry Analysis The Porters Five Forces model has been used to analyze the industry.5. lack of co-ordination between government bodies and private players.2. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 14 . E. comparatively low capital investments and easier imports. factors like lack of infrastructure and communication facilities. However. customers are not able to experience a wide variety and new range of products. low capital investment. low competitive rivalry. Although 90% share of the industry remains with the unorganized sector. growing demand. less interest of young people in craft industry are some of the industry weaknesses. inadequate information of new technology. there is an increasing demand but limited number of dominant players. variety of products categories provide an advantage to the décor and handicrafts industry. it can be said that any investor who wants to enter India as an industry player can take great advantage from following factors . E. abundant and cheap labor to compete on price. To sum up. available opportunities and potential threats and respective impacts of each of these. inadequate information of current market trends. the internal competitive rivalry is not significant.5. ignorance / lack of information availability. Comparing the strengths.

However. in case of furniture it is a joint decision between husband and wife (also influenced by the children in some cases). Indian customers see Thailand as a country with more innovative. The other factors that are considered are aesthetics. In terms of price range. There is association of fragility with Thai products in the consumer mindsets. On a comparative scale. renovation and new home purchases. It is recommended that a new player who wants to enter in the Indian market is should have multiple point of presence and established brand name in addition to meeting consumers‘ expectations for basic looks and quality. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 15 .6. Word of Mouth. Sometimes. it was observed that home furnishing purchase decisions are mainly taken by women in the household. visiting exhibitions become the source of information and point of purchase as well. Other than these occasions. attractive and varied designs. there is no such information search phase. important from the point of view of foreign entrants are as follows:  The major reasons identified for home furnishing purchases are related to home remodeling. Consumer Insights Key consumer insights. which can have a positive impact for decoration related product categories but can have a negative impact in case of furniture and utensils. furniture and decorative products are also purchased during celebrations around Diwali or marriage seasons. purpose and price.E.  After sales services / warranty period is an important consideration in the purchase process of furniture goods. quality.  As expected. consumers perceive Thailand as a country that will offer most of the products at affordable prices. Thai price range will fall somewhere close to China and India.  The most preferred information sources for furniture purchases are internet. . with exclusive product designs and position itself as a brand that will be always there to provide after sales support. because of high money outlay involved in it. In case of interior decoration items. The company can set up its own showrooms across the country.  Perception about Thai companies – In terms of product design and quality. print media and exhibitions.

Better Packaging. Perceived as a shopping destination of moderately affluent class of the society Office Space in India is growing rapidly. through wholesalers Middle Class Large Product Assortment. Ethnic / Culture based Positioning INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 16 . Thailand is seen as a country with a status quotient attached with its products. Timely Delivery. Availability. Market Segments Key Take Out from the Market Study Expanding Middle class and Upper middle class Entry Strategy Either through Joint Venture or step by step entry by establishing only a liaison office first Distribution Route Target Segment Critical Success Factors Household Furniture – High End Segment India is a complex country with cultural variation  important to gather information first Middle . Exclusive designs. Strong Logistics Network. Customization Household Furniture – Low End Segment Imports Tying up with existing Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices. Warehouses in Tier 1 cities. Better packaging. Brand Name and After Sales Support Office Furniture Institutional Customers look for brand names that can compliment with their own brand name Indian customers are now spending more on Home Furnishing Among Indian customers. Well – Established Brand Name.middle and Upper middle class ready to pay extra to ensure durability However.E.7. attractive and ethnic products in the handicrafts and décor industry Joint Venture / Medium Scale Firms Direct Selling and Marketing Tie ups with Builders and Architects Service Industry (IT and BFSI Sector) . After Sales Support. Recommendations for Thai Investors The recommendations for the identified four potential market entry segments can be summarized as follows:-. Warehouses and connectivity through strong Logistics Network. High Quality. Large Volumes. will grow at 20% CAGR in coming four to five years Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation.Mid Size Offices Handicrafts & Décor Products Imports Buying and Selling Agents. Thailand is perceived to be price competitive Thailand  Positioned as a country with delicate. considered as a price competitive country. Product Exclusivity.

Growth of Customer Segments. Minimum efforts and investments required for  market development (entry through JV and distribution through existing hypermarkets) and promotion. Limited number of sector strong players in the industry. Growth in Allied Sectors. Office Furniture  growing at a fast pace (20% CAGR). Household Furniture – High End Segment  Given higher disposable income. providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. customers are ready to pay an extra buck for better quality and designs. The findings from this analysis can be summarized in the table below: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. Handicrafts & Décor Products There is no need for macro-investment. Potential Entry Barriers Scale of Investments required etc. Huge demand but limited supply from organized sector Office Segment of India is in a booming stage. Products are  present throughout the low value to high value added band. Competitive Scenario. advantage in terms of Household Furniture – Low End Segment volume. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 17 .The market attractiveness analysis of the above-mentioned four segments has been done based on factors like Industry Growth Stage.

The opening of furniture markets over the past Ten Years The most important structural Imports/Consumption Ratio 35% 30% 25% 20. 12% U. reaching 25% in 2001 and almost 30% in 2006. 3% Poland. There are two countries. 21% India.S. Furniture production in emerging countries currently amounts to 35% of the world total in value. 4% U. providing the most important stimulus to world furniture trade. 3% Emerging Countries World Furniture Production Other Emerging Countries. Growth of the imports/consumption ratio has been rapid.K.1. Germany. in order of furniture production. Global Furniture Industry 1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 18 ..1. It is now leveling off and it is estimated that in the next few years it will remain at a level of about 30%. 3% Developed Countries of the world total. where the trade deficit for furniture was almost US$ 22 billion in 2006. The furniture production of all developed countries combined covers 65% Other Developed Countries. where production is increasing rapidly. measured as the ratio between This imports increase and is consumption. China and Poland.6% 22. Overview: According to the CSIL‘s (Centre for Industrial Studies) ―World Furniture Outlook 2008‖ report..3% 24. Japan.7% 30.8% 28. 3% Canada.1.9% phenomenon of the past decade is the increased degree of openness of the furniture markets. 15% France. The seven major industrial economies (which are. 7% Japan.1. the United States. 3% Italy.5% 24. 18% Germany. the United Kingdom. 8% China.5% 26. Canada and France) together produce 50% in value of the world total.0% 29. Italy. Global Furniture and Handicrafts & Décor Industry 1. particularly important in the United States.3% 29.2% 20% 15% 10% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21. world production of furniture is worth about US$ 307 billion.

It is expected that this figure will grow by 5% in 2008. World trade of furniture grew by 7% in 2007 and was equal to US$ 97 billion. it would be equal to US$ 102 billion. only one-half of world furniture trade can be considered "global" in the sense that it takes place between countries in geographically distant regions. On balance. trade within regions amounts to about 47% of total world furniture trade. in which case. especially to Germany INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 19 . Therefore. more than 40% of total foreign furniture trade is within the region. The most important of these flows are:    From the emerging countries of Asia to the United States (67% of outgoing flows from this area) and to Europe From Europe to the United States. mostly from Italy From the new EU members to Western Europe. World Trade of Furniture (In US$ Billion) 120 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 45 48 52 51 55 65 77 84 91 97 102 A sizeable percentage of international furniture trade is carried out within the economic regions into which the world economy can be divided:    In the European Union (15) and Norway and Switzerland about 57% of foreign furniture trade takes place within the same countries In the NAFTA area (US.International trade of furniture has grown faster than furniture production because of the opening of the main furniture markets in the last ten years. Canada and Mexico) about 33% of foreign furniture trade is within the three countries In the Asia and Pacific countries.

however.2. China moves to the first position becoming the leading exporter. Several interesting changes that emerged from this study are as follows:    The European Union lost about 15 percentage points The new EU members gained about 6 percentage points The Asia and Pacific area gained 13 percentage points The surge of imports into the United States was accompanied by an increase in exports from China. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 20 .3 billion in 2007 (preliminary) in current dollars.1.6 billion in 1997 to US$ 25. The main furniture exporting countries The main furniture exporting countries are China. Other major furniture exporting emerging countries are Poland. Canada and Mexico. are number one furniture importing country on a world scale. Poland and Canada. Germany.S. with imports growing from US$ 8. About 52% of exports come from developed countries. The evolution of exports by the main exporting countries between 1997 and 2007 was as follows: The relative positions of the main exporting countries have changed considerably between 1997 and 2007. Vietnam and Malaysia. The U. Italy moves from first to second and Poland from eighth to fourth. the share of developed countries decreased by 23% to the advantage of some emerging countries: From 1997 to 2006 China's share increased from 4% to 19%. Italy.1. Percentage breakdown by geographic area in 1997 and in 2006 was also studied.

manufacturing processes. which have been doing well on basic factors of production like labor and raw material. account for 77. Another significant change is the surge in contract manufacturing arrangements between EU and Asian countries like China. Despite the fact that it is a highly competitive market. prone to impulse purchases.2.2. which result in shorter product cycles. these countries. and consumer preferences. Major Importing Nations The top 10 markets. This has enabled a country like China to leverage its inherent strengths like availability of abundant and quality labor. The rising levels of consumer disposable incomes together with the tendency to accessorize and re-style homes with unique articles are the major driving factors for the surge in demand for crafts and decorative products. it continues to remain the most attractive market because of the sheer purchasing power and stability of the market. technology. Canada. Belgium and Spain.1. Germany. Germany is the second largest importer and accounts for 8. which are usually machine made. USA is the largest importer accounting for 32. and raw material. the demand is more for low price products. to become the single largest exporter with a market share of about 30% in the total world exports. product requirements and standards.5% of the total world imports of crafts and decorative products. France.1.2. Exporters are at their best in delivering products low price products that match consumer preferences. As a result. are now exposed to sophisticated designing. 1. Currently. the market is more oriented toward fashionable products and hence. which include countries such as USA. Hong Kong and Taiwan. Hong Kong. United Kingdom. Overview Driven by positive changes in major markets like USA and Europe. As a result.8% of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 21 . Increases in population and multi-ethnic composition are other factors that make this market attractive. However. Global Crafts and Decorative Industry 1. the world crafts and decorative market has been witnessing a good growth from 2001 onwards.2.3% of the world imports. Japan.4% of the total imports followed by UK which accounts for 7. the market is becoming highly price competitive in the low and medium value market segments.

85% of these imports are for the purpose of re-exports. Hong Kong. Spain and Mexico are the top ten exporters of crafts and decorative products in 2003.3. Turkey. Germany. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 22 . France.2.the world imports. 1. USA. India. Italy. China‘s ability to supply large volume and wide range of low-cost products has pushed in the forefront of competition. Major Exporting Nations China. Hong Kong is also a large importer of crafts and decorative especially from China. However. China is the largest exporter of craft and decorative products.

Czech Republic. Middle Market Segment . Low – End Market Segment . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 23 . toys and dolls. Indonesia. products categories such as basketwork. These countries occupy leadership positions in categories like ceramics. USA. leather goods. Taiwan. Vietnam. and supply high value crafts and decorative products. 3. Thailand.2. whereas Indian products are mostly handcrafted and exemplify a high degree of craftsmanship. Segmentation – Exporting Nations The exporting nations can be classified in different leagues based on the value of products they export and the markets they address: 1. Malaysia and Philippines are the other leading Asian suppliers of low to medium value products. Hong Kong.In the low and medium value products.Countries like Italy. About 90% of products of Chinese origin are completely or partly machine-made.Eastern European countries like Poland. These are mostly machine made. Spain and UK dominate the high-end market Italy Germany France Turkey USA Spain UK Poland Taiwan Hong Kong Belgium Korea India China China India Thailand Vietnam Malaysia Indonesia segments. Korea are major players in the medium value products. Barring Hong Kong and Taiwan.4. Apparently. France. High-End Market Segment . Turkey.1. 2. They also re-export product imported from other neighboring Asian countries. ceramics. China and India are the two leading competitors Low –End Market Segment VALUE among Asian countries. Hungary and Romania and Asian countries like Hong Kong. a large proportion of produce from Hong Kong and Taiwan are machine made. Germany. Belgium. Taiwan. furniture. V O L U M E Middle Market Segment High – End Market Segment furniture and lighting articles. woodwork and some varieties of textile from other Asian countries are mostly handcrafted. The main factor that distinguishes product from these countries is the level of mechanization. glassware.

The emerging middle class will surge tenfold. India has undergone tremendous economic development in last few decades. Important Demographic and Economic Trends 1.744 INR to 318. To be precise. China. Following part of this chapter outlines the major trends and changes that India has gone through during past decades. It will command 60% of the country‘s spending power.896 INR. exceeding 500 80% 60% 40% 20% 0% 8% 1980 Growing Middle Class 500 368 220 65 22% 2000 %age Population 32% 2010 2025 Million People 60% 200 0 600 400 million by 2025.Recently joined the trillion-dollar GDP club India economy is now fourth largest in the world and is estimated to cross Japan 2007 2002-2006 1980-2002 1950-1980 1900-1950 0% %age Average Annual GDP Growth 9. with an exception of China. Average real household income will grow from 113. If the same is achieved. Tripling Indian Incomes .20% 8% 6% 3. competitiveness of Indian economy and favorable demographic trends a compounded annual growth rate of 7. India today is seventh most attractive destination for foreign direct investments. Brazil. with a CAGR of 5. UK. 3. Mexico & Germany. INDIA – Important Trends in Indian Economy Moving its population out of poverty and generating huge demand. India has now become one of the most favored destinations for international businesses to expand.3%. This is much faster than income growth in other major markets. 2.2.3% can be assumed from 2005 to 2025. Considering the fast growing and barely tapped middle class market. Exploding Middle Class – As Indian incomes rise. after US.Given the substantial scope for continued productivity increases in Indian businesses. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 24 .50% 1% 2% 4% 6% 8% 10% between 2012 and 2014 to become the third largest. Rising India . Indian income levels will almost triple in next twenty years. India will create a sizeable and largely urban middle class. the shape of the country‘s pyramid will also change dramatically.

5 9.6 4. India will be defined as a country with self-confident. Young and Home Maker India . 16% of its population belongs to an age group of 25 to 34.2 9. India to be the world’s fifth largest consumer market by 2025 – Given the rapidly increasing household incomes and a robustly growing population will lead to a striking increase in overall consumer spending. Above-mentioned four factors combined result in a multiplier effect leading to an accelerated economic growth.5 6.6 8 10 12 0 2 4 6 As can we also see from the above chart. 80+ 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 0.0 2.With 49% of its population below 24 years of age. Rising consumption Rising income Multiplier effect GDP growth Rising production 5.4.1 1. assertive and risk takers generation.8 1.9 49% below 24 years 9.5 5.11 Billion % Population 2011 16% between 25 – 34 years .7 3.Target Segment for Home Furnishing market 6. a generation that is either ready to step or has recently stepped into next stage of their INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 25 .2 Total Population: 1.6 2.8 7.9 10. The aggregate consumption in India will grow from 17 trillion INR today to 34 trillion by 2015 and INR 70 trillion by 2025.5 9.5 8.

decreasing household sizes and a housing shortage of currently 20 million units will call for extensive residential construction. This figure is growing at a pace of 30% for the last few years. Almost 80 % of real estate developed in India. Changing Indian Families – Some of the recent trends in the Indian households which will have a significant impact on the furnishing industry are: a) Sudden and accelerating growth in number of nuclear families  Requirement for setting up new Homes b) More working women  Increasing number of double income families  Higher disposable income  Higher spends across all categories of purchases c) Consumers becoming status / class conscious  Higher expenditure on Home Furnishing and Decor products (Wallet share of home furniture and furnishing has already touched 2. hotels and hospitals b) India possesses the elements of very strong demand growth on the housing market in the coming decades.lifecycle – Married Life. 2. Considering the needs of this age group that is to make new homes. this segment will be maximally responsible for the Home Furnishing product purchases. Housing Market set for strong growth – a) The size of the overall real estate industry in India is estimated by FICCI.7% of the total household expenditures of India) INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 26 . is residential space and the rest comprise office. Other than the above-mentioned general economic and demographic trends. following variables also have significant impact on Furnishing industry in India: 1. shopping malls. By 2030 India will need up to 10 million new housing units per year. Rapid population growth. rising incomes. to be around US$ 12 billion.

unorganized sector commands the market with a share of around 90% (INR 315 billion). accounting for the remaining 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 27 . According to industry experts. the office furniture segment with a 20 per cent share and the contract Office. Overview: Size of Indian furniture industry as estimated by the industry experts is approximately worth INR 350 billion. Kian. This is divided into two broad categories – Unorganized Sector and Organized Sector. 20% Contract. 3.1.1. Millennium lifestyles. Furniture Industry 3. Style Spa – 5% 3. As low as 10% (INR 35 billion) of the Indian furniture industry is the share of organized sector. to name a few – Featherlite.1. Dominant players in the organized sector with their respective market shares within the organized sector are listed below (also shown in adjoining chart): 1. Durian – 3% Remaining 70% share of the organized furniture industry can be attributed to some of the region wise or product segment wise strong players. This is followed by.1.3. Furniture and Handicrafts & Décor Industry in India 3. Tangent. home furniture is the largest segment in the Indian furniture market. Godrej and Boyce – 23% 2. Industry Segmentation Application / Customer Segment Wise – As with the global market. 15% Industry Segments Household. @Home. 65% segment. V3.2. accounting for about 65 per cent of furniture sales. Renaissance.

which are likely to remain a strategic priority as growth is predicted to be robust. The type of furniture used depends on the customer‘s affluence and taste. About 16 per cent is estimated to live in single-room homes. European style furniture is only found in homes of the urban upper class. in line with the growth in the Indian economy and subsequent demand for office space. It is also estimated that the wealthier classes do not change furniture very frequently. so price is rarely a determining factor. Colonial furniture is still very common in India. scope for new tourism development could be seen notably in emerging economic giants India and China. Contract segment (Fifteen Percent Share) The contract segment caters primarily to hotels and its growth is consequently linked to growth in tourism and development of new hotels. The growth of hotel industry in India can be attributed to the recent growth in the service industry and economy as a whole.percent. Home furniture (Sixty Five Percent Share) Home furniture in India is available in a wide range. Brief description of each of these three segments is provided below. In general. This segment has witnessed rapid growth in recent years. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 28 . while 45 per cent live in houses with three rooms or less. About 25 per cent of the urban populations live in homes with five rooms or more. to cater to different customer needs. A typical middle class urban Indian home has five rooms (including kitchen and bathroom). Demand for furniture of international standards is limited to the larger cities. indicating continued growth for the furniture industry. Office Furniture (Twenty Percent Share) The office furniture segment caters to the commercial and office space. but the trend seems to be declining slowly. According to the World Travel Market‘s Global Report 2008. The thrust on real estate and office construction is expected to sustain in the near future. the average life of a piece of furniture is about 20 years and some artisans‘ pieces are used for as long as 50-70 years. The rich and upper middle class is typically very attentive to design and quality. albeit slow down in global economy.

However. Industry Growth Trends and Forecasts Maintaining a decent rate.3. as recession cannot have significant impact on household demands.it is bought only when one wants to renovate or wants to do away with old furniture while shifting to a new place. which goes along with latest trends. will not be affected much. This can be further attributed to higher disposable incomes. In this regard. As such needs can wait. some level of uncertainty has definitely cropped up after the economic recession has hit the globe. Now.Now days nobody has the time to employ a carpenter to get his or her furniture made in home.Customers no more want to take the pain for deciding designs or raw material for their furniture. which is dominated by household furniture. which suits his wallet and buy immediately. the overall furniture industry has grown at 10% since last two three years.Furniture is never seen as an urgent customer need .1.  Lack of Time . INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 29 . furniture market.  Convenience . Considering the recent developments in organized retail industry and rapidly changing consumer markets as constant factors. This faster growth of organized sector can be attributed to certain factors like:  Growth of overall organized retail industry is the most important reason for faster growth of organized players in furniture industry. Especially with the growth in the number of double income families – where both husband and wife are working. they just want to go to a retail store. more importantly. An interesting trend underlying this growth rate is that the organized sector of the industry has shown a better growth falling between 17% . no one has the time to get the furniture made by the carpenter. industry experts have two different viewpoints . like earlier days. changing lifestyles and India‘s overall economic growth. the overall furniture industry is expected to grow at 15% CAGR for next five years. However.3. recession might decline the demand.20%. select something that they like.

Other than these two. Higher Disposable Incomes.1.Rising income levels. rapid increase in number of hotels in India New Affluent Indian Consumer . Increasing number of double income families Retail Industry Growth – Increase in number of organized retail stores.4. factors and sub-factors having significant influence on the industry demand are as follows: Real estate growth – Increasing demand for residential space. leading to easier product availability Key Growth Drivers Tourism and Hospitality Industry growth – Rising number of foreign tourists in India.3. home loans at lower interest rates. significant spends on home décor due to peer pressure INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 30 .Buying latest style/designs to keep up with the fashion / trend. entry of modern retail formats. Key Demand Drivers of the Furniture Industry Consistent growth in the Indian economy and rising living standards are the key factors driving the demand of the Indian furniture industry. growth in office space – IT/BPO/ BFSI Changing Consumer Demographics .

traditional.3. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 31 . India is one of the important suppliers of handicrafts to the world market. Handicrafts are made from raw materials and can be produced in unlimited numbers. The Indian handicrafts industry is highly labor-intensive cottage based industry and decentralized. being spread all over the country in rural and urban areas. Numerous artisans are engaged in crafts work on part-time basis. Low capital investment. It has shown continuous growth at the rate of 15-20% over the years and contributes major role for export and foreign earnings. some part of Indian market are still untapped and market is price sensitive. However.2. high ratio of value addition. Cheap and skilled labor.2. In spite of having diversified products. Overview As it represents rich culture and tradition of the country. Indian handicrafts and decorative industry has a unique place among all the industries. This gives rise to an opportunity for new entrants to tap some price sensitive customers who cannot afford the highly expensive products made available in the metros and tier 1 cities of the country. about 70 million people are engaged in handicrafts sector all over the country and their annual production is around INR 210 billion out of which products worth of about INR 90. which are produced either completely by hand or with the help of tools. Defining Handicrafts: Handicrafts can be defined as products.3 billion is being exported. High potential for export and foreign exchange earnings and Flexible Production are few important features of Indian Handicraft and Decorative Industry. Lack of awareness of international and new trends and Poor Promotional campaigns are a few drawbacks of industry. According to one of the study. artistic. creative. Such products can be utilitarian. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Lack of Infrastructure & Technological support.1. aesthetic. Indian Handicrafts and Decorative Industry 3. diversified product portfolio. Indian Handicraft Industry has the status of cottage industry in India. religiously and socially symbolic and significant. but it has shown promising growth and evolved as one of the major revenue generator over the years. decorative. which needs to be overcome. culturally attached. functional.

The Cultural and Economic Importance of Handicrafts: The Cultural Importance: Handicrafts play very important role in representing the culture and traditions of any country or region.2. traditional skills and talents that are associated with people‘s lifestyle and history.2. heritage and culture. They provide many opportunities for employment even with low capital investments and become a prominent medium for foreign earnings. The Economic Importance: Handicrafts are hugely important in terms of economic development. 3. Products served by this industry can be distinguished as follows:                 Metal ware Wood ware Hand printed textiles Embroidered and crocheted goods Shawls Carpets Bamboo products Zari goods Imitation jewellery Paintings Earthenware Jute products Marble Sculpture Bronze Sculpture Leather Products Other miscellaneous handicrafts INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 32 . Classification / Segmentation of the Industry: Handicrafts and Decorative industry comprises of diversified products portfolio and there is large variety available in market. Handicrafts are a substantial medium to preserve of rich traditional art.

Dharmshala / Chamba & Srinagar Agra. Product Category Artmetalware Regional Clusters Moradabad. Kolhapur. Farrukhabad. Handicrafts Clusters in India Handicrafts industry is widely dispersed across different states of India. Jaipur. Although artisans and artisans are found in most parts of the country. Bangalore. Madras. Madras. market development and innovative activity in comparison to the eastern states of the country. Lucknow. Baster. Amritsar. only a few states and regional clusters contribute maximum to the exports.3. Jodhpur. Jaisaimer. Jodhpur. Nagina.3. Jaipur. Rajasthan and Uttar Pradesh. These are Gujarat. Madras. Chennapatna. Baroda. Jodhpur. Beedar. Moradabad. Rewari. Jaselmer Saharanpur. Sambhal. and socio-religious factors. Jaipur is a classic example of effective synergies between tourism. Kohima (Tribal) lndore. Aligarh. Jagdalpur. Kerala & Behrampur (WB) Amroha. Madras. Sambhal. private enterprise and strong NGO movement. The following table lists the major clusters for the production of different handicrafts items in India. Baster Delhi. Agra. Madras. Delhi. The rich craft heritage of India is unique and as diverse as its customs and traditions. Jaipur. Amritsar. climate. Indian handicraft traditions are influenced by the local topography. Thanjavur. Shanti Niketan (WB) Wooden Artwares Hand printed Textiles & Scarves Embroidered goods Marble & Soft Stone Crafts Papier Mache Crafts Terracotta Zari & Zari Goods Imitation Jewellery Artistic Leather Goods INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 33 . Jaipur. craft traditions. each one specializing in one or other type of handicraft activity. Hoshiarpor. Jodhpur Rajasthan. Kerala & Jagadhari. Mandap. Jodhpur. Sagru & Sanganer Kutch (Gujarat). Mysore. Jaipur Agra. Baster. Jodhpur Kashmir. Srinagar.2. These regions are the major source of exports and have better infrastructure. Kullu.

identities of true craftsmen are guarded by the middlemen. Lack of information on sellers The importers often find it difficult to access the local artisans directly.4. who do not wish to lose their commissions by enabling direct contacts between the craftsmen and importers. silk. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 34 . who purchase artifacts at low prices and sell them to the buyers at exorbitant rates. The raw materials with acute shortages include cane. Lack of information on buyers Local artisans are mostly illiterate and do not have information about their prospective buyers.2. Often. the artisans are not in a position to furnish any large-scale orders. Challenges in the Indian Handicrafts and Décor Industry Lack of economies of scale Owing to inherent problems of finance. Scarcity of Raw Material Challenges Décor and Handicrafts Industry There has been a decline in the availability and quality of some of the raw materials used in the production of handicraft goods.3. scrap and virgin metal. thereby pocketing the huge margins. This asymmetry of information is often exploited by the intermediaries. dependence on simpler tools and social issues.

It can be available at both cheaper and higher prices in comparison to domestic furniture. The current furniture imports are mainly from China. still it is preferred more than the local products because of better finish and use of modern technology and machinery in case of imported products. Spain. Korea.00 58. but it INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 35 . This increase can be attributed to factors like increasing demand for furniture. Italy.93 20.Imported furniture is India is present in all segments – Low Price to Premium priced furniture.00 160. the entire value chain of the Indian furniture industry can be understood under two broad categories:   Imported furniture Domestically manufactured furniture 4. Philippines and Japan. China and Malaysia tops this country list by contributing the most to the industry.79 CAGR = 64% 80.00 32. There is a segment of locally manufactured products.1. Imports Trend .1. which is of the same quality and better designs. Indonesia. Understanding the Value Chain 4.4.00 120. Malaysia.43 2005-06 2004-05 2003-04 2002-03 2001-02 0.93 40.00 92. Increasing income levels and influence of global lifestyle trends have also influenced many Indians to move towards imported furniture. Furniture Imports in India (in Million USD) 152.1. fuelled by the boom in housing and commercial construction.00 Imported vis-à-vis domestic . furniture imports in India have grown at a CAGR of 64%.Over the 5-year period from 2001 to 2006. Germany. However. Furniture Industry Value Chain Given the significant contribution of imports.

imports are preferred. Franchisee Manufacturers Own Stores Distributors Retailers Importers Distributors Imports INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 36 . Style Spa‘s focus is on bedroom furniture) therefore. Government does not allow FDI in single brand retailing for imported products in India whereas for the local products there are no such restrictions. the local product is good in comparison to the imported products. Value Chain for Imported furniture – In the current scenario. these are 1. (for e. there are market players who are solely into importing and selling furniture in India.the product life is quite short. most of the manufacturers in the current scenario have some strength areas or competency in some specific product segments. Style Spa and Godrej are good examples. there are also some drawbacks associated with imported goods.g. For furniture. In case of organized sector. 2. Because. Manufacturers – Some players are importing furniture along with their own manufacturing set-ups.is available at significantly higher prices.Wood product imports were liberated in India in 1995. Importers – In addition to the above category. Within the sector. for rest of the categories. the Indian government continues to reduce tariff rates from a peak rate of 300 percent in 1991 down to current rate of 31. This category can also be termed as Traders.70 percent on standard value of goods. Since then. this rate ranges between 31 and 36 percent based on the type of furniture imported. There is a good demand for mass produced imported furniture as they could be purchased ―off the shelf‖ and. Example . Current Import Duty Structure . could be used instantly. there has been decline in import duties on wood and wood products. there are two categories of suppliers who are responsible for furniture imports in India. furniture is being imported by both sectors of the industry – Unorganized and Organized. Whereas in terms of availability. Actually. At the same time. lack of reliability and responsibility in terms of after sales services. The figure below summarizes the entire value chain of imported furniture industry in India.

raw material (type. 65% India imports wood from various South East Asian countries such as Indonesia. as well as imported wood. Malaysia and Myanmar. with bamboo and cane also being used in some cases. The key raw materials include wood.1. The difference between value chain of domestically manufactured furniture from that of imported furniture lies at the first stage. there is an additional level of stakeholders before manufacturers. Domestically Manufactured Furniture Various aspects related to customers (changing lifestyle and preferences). It also imports MDF (Medium Density Fiberboard) boards from Europe. Wood accounts for nearly 65 per cent of all furniture made in India. 25% Wood. capacity to build (production capacity and utilization) and capability to design (availability of professional designers) drive furniture manufacturing industry. availability & sourcing). Raw Material Share Plastic. In this case. 10% Metal. The above stated difference is depicted in the figure below: Franchisee Raw Material Suppliers Manufacturers Own Stores Distributors Raw Material Imports There is a wide variety of raw material used for furniture making in India.2. This includes several types of indigenous wood. These factors combined together are responsible for deciding the actual value of the furniture. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 37 .4. metal and plastic. these are raw material suppliers.

Godrej Interio. Direct selling through own retail stores 2.Depending upon the type of raw material to be imported. Godrej Interio also specializes in providing customized solutions to some specific institutional segments like labs. 2. with more focus on office segment. This model sells both office as well as home furniture. There are more than 500 franchisees. Through distributors or franchisees Distribution channel structures of three major players are described below for better understanding.Godrej Interio is a unit of Godrej . Distribution Channel Structure – Godrej Interio has adopted two types of distribution models: 1. Interio owns around 58 stores spread across 25 cities in India.One of the largest engineering and consumer products‘ company in the country having varied interests from engineering to personal care products. thus positioned as Home and Interiors Store. navy etc. Catering to office as well as home furniture needs. no other intermediaries are involved. In contrast to the above category. Particleboard is preferably imported from Thailand and rubber wood from Malaysia. For example. is present in both office and home furniture. the leading player in organized furniture industry of India. be it individuals or institutions.3.1. located in tier 1. this model of distribution largely sells the latter. Case 1: Distribution Model of Godrej Interio – Brief Profile . 4. Along with this. Own retail Stores – named Lifespaces. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 38 . Both the above-mentioned models sell directly to end customers. Franchisees – named Interio. 2 and 3 cities of India. Distribution Structure Distribution channel adopted by leading furniture-manufacturing companies in India can be classified into two broad categories: 1. these can be multi brand stores. different players have different preferences.

Remaining 35% is from living room and miscellaneous categories. except for less than one percent of their customized services to some special institutional segments.In case of institutional customers. office furniture Godrej Interio does direct selling. The company is pioneer and one of the largest manufacturer in panel based furniture made from particleboard. in this case. Indian Furniture Products Limited / Zuari  Distributors  Dealers In this case. i.e. Case 2: Distribution Model Style Spa Limited Brief profile: Zuari Chambal Group of K. The same is done through either cold calling (whenever there is news of any company or office expanding. presentations are made pro actively to sell) or else by attending to the requests received from the customers directly. in home furniture category. Then distributors give away the product to the dealers. these are multi brand multi product outlets. but these are not exclusive stores. Although. Style Spa has positioned itself as specialist in Bedroom Furniture. Further. distributors take away the products on cash and carry basis. K. Style Spa Exclusive Stores These are exclusive stores owned by the company where only style spa products can be sold. 2. There are 90 showrooms of style spa all over India – making Style Spa the largest chain of furniture showrooms in India. Through Dealers – Second model is of selling the furniture through dealers. Bedroom furniture accounts for 65% of the total sales. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 39 . furniture is sold under the brand name of Zuari. Birla conglomerate promotes Style Spa Furniture Limited as a company. furniture manufactured in this company is sold under the brand name of Zuari. 74 stores are company‘s own stores and remaining 16 are stores owned by exclusive dealers – which cannot sell other products or brands. Distribution Channel Structure – Furniture is sold through two routes – 1. There are no other intermediaries. Indian Furniture Products Limited is the manufacturing company. Style Spa is only into home furniture. Out of these 90.

Durian has a main/central warehouse (2. Some of the material is manufactured. and they cannot sell other brands. Out of 43. it is present in almost all types of products. arrangements are made for the logistics and material is finally sent to the destination showrooms. In case of Home furniture. However.2 lakhs sqft area) in palgaon (100 Km from Mumbai). Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken. Durian has project offices in all the major cities like Delhi. 1998 onwards Durian entered in furniture trading. Conference table and Book Shelves. Thailand. which is importing and distributing in India.Home as well as Office furniture. Durian currently imports furniture from Malaysia. It is also into manufacturing. part is imported (depending upon demand of the project). 30 are owned by Durian. Durian is present in both categories .Case 3: Distribution model of Durian Industries Limited Brief Profile . PVC doors. China.Durian is mainly into manufacturing of plywood. By this route. but only for some categories of furniture . Through retail showrooms – 43 retail showrooms of Durian are present across India. Durian mainly caters to the needs of the individual customers. Durian has limited presence in case of office furniture – Office table. Material that is imported is stored in warehouses and then distributed to showrooms all across India. Then as per the orders. 98 percent of Durian‘s Sales is from imported furniture and only 2 % is from domestically manufactured. Spain. and Italy. Project sales – This model is mainly to cater to institutional customers. these dealers are authorized exclusive dealers.chairs. Orders from different showrooms come to the central warehouse through their ERP system. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi. 2. Orders are generated in these project offices and their demand is communicated to Mumbai head office. and decorative veneer. Office chair. Distribution Channel Structure – Two types of channel 1. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 40 . Hyderabad and Bangalore. modular workstations. Dealers own remaining 12-13.

however one product category is restricted to one floor only. with discounts offered to customers who are willing to carry heavy appliances and furniture out of the stores. India has grown from the traditional Mom and Pop stores present here and there in the neighborhood catering to the convenience of the consumers. Furniture Bazaar along with being present as a furniture-dedicated section under Big Bazaar is also present in two other INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 41 .000 sq ft to 25. In this category of retail.1. mostly follows modern formats as far as retailing to end customers is concerned. Through this format. Furniture Bazaar is the section of Big Bazaar that focuses on furniture. Example .4. The result is a very large retail facility. In terms of space. Variety and Volume‘ is the latest trend. demand etc. which is largely dominated by unorganized sector in terms of supply. Emergence of organized retail industry has its impact on the Furniture Industry as well. which carries an enormous range of products under one roof. large and small appliances.4. such hypermarkets in India are present in the range of 50.Big Bazaar. These hypermarkets are typically multi storied. a unit of PRIL (Pantaloon Retail India Limited) is one such example. the customer segment that is targeted is the middle class of the country. The retail formats present in the furniture industry of India can be categorized into following two categories: a) Hypermarkets b) Specialty Stores or Home Improvement Stores Hypermarkets A hypermarket is a superstore that combines a supermarket and a department store. Furniture Industry and Organized Retailing India has seen a resurgence of Retail sector. Its product assortment goes beyond routinely purchased goods and includes furniture.Value. clothing and many items. The latter. space that is allotted to furniture as a category may vary between 15.000 square feet to 200000 square feet depending on various parameters like store location. The basic approach is bulk display and minimum handling by stores personnel. Emergence of shopping centers mainly in urban centers with facilities like car parking and finally growth of modern retail formats like hyper and super markets trying to provide customer with ‗3 V‘s .000 sq ft.

formats – online store and stand-alone stores (in few places). bedroom. Home Centre (Lifestyle) etc. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 42 . Design Centre. etc). Tilewala. the appropriate term would be specialty stores. The displays echo the aspirations of the consumer. The store also has a customer service desk to help customers with any service related challenges. Plumber. example of Home Town is explained below: Home Town. For a detailed understanding of this category. Considering the fact that these stores not only specialize in furniture as a product category but also focus on other home furnishing and home décor related categories. The objective with which these stores operate is to provide one stop shop for those who are setting up new homes or those who are renovating their homes. markets and services. Home Stop (Shoppers Stop). keeping traditions alive in a contemporary world. the aspirational customer as well as the lifestyle-driven customer. dining market. so appears eminently approachable to the budget-buyer. these can be termed as home improvement stores as well. Electrician. dining room. e Zone (consumer durables and electronics) and Depot (books. door delivery and installation. Examples of such formats in Indian furniture industry can be Home Town (Pantaloon Retail India Limited). Mr. The services section offers service options such as . Since this format has less diverse product range. grihapravesh. Painter. a unit of PRIL. Carpenter. is divided into three sections – exhibitions. Home Town has live displays of various rooms such as living room. bathroom market. Specialty Stores / Home Improvement Stores A specialty store can be defined as a retail format that concentrates on a limited number of categories along with some complimentary categories. kids' room.Mr. Home Town is an amalgamation of the value and lifestyle propositions. best wishes. In case of latter. kitchen market. mattresses. music. Mr. bedroom market. Home furnishings. These kinds of stores provide a high level of service in their focus categories. Mr. kids' room market. kitchen & bathroom in the exhibitions section. This category of stores is explained in the next section. thus it is comparatively easy to manage the supply chains. The markets section features products for living market.

thus eliminating the need for an independent exporter and as they are working less with sales representatives.4. internet has emerged as a major distribution channel for décor & handicrafts items There is a definite trend in the Indian market towards flattening of the distribution channels for crafts and decorative products. which has further INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 43 . The reason being. importers/ wholesalers and large retailers want a closer relationship with production in order to implement customized product development. As such the importers/wholesalers are increasingly buying from producers with export marketing capacity. an essential for staying competitive in the market. The distribution channel for crafts and decorative products in India follows the following model - Producers Importers / Wholesalers Final Point of Sale Small Retailers  Most common channel  Carry variety of product categories under one shop Large Retail Chains  Stock in bulk  Sell to final consumers or small retailers E – Retailers  In recent times. there has been a rapid growth in the increase of crafts and decorative products sales through large retailers like national and chain stores and mail order catalogue. ethnic products do most of their own importing and dealing with manufacturers.2. Even the smaller independent shops that deal with the traditional. The importers/retailers prefer to deal directly with the producers /exporter. Secondly. Handicrafts & Décor Products Value Chain The Handicraft supply chain of India consists of importers and wholesalers who supply goods to retailers and small chains.

The small importers/wholesalers are also no longer working with sales representatives so as to keep price margins competitive & because sales representatives are geared to work with large wholesale companies that have greater volumes and higher price margins than small to mediumsized companies. department stores and hypermarkets are becoming the more prominent distribution mode. The most popular channel for distribution of the more traditional. they cater to the higher-end market with special up-market ranges. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 44 . Since the large department stores cannot compete on the terms of price. Direct import retailers that work with more than one supplier in a given country often opt to work with an independent agent or an overseas export consolidator who is responsible for coordinating orders and shipments. This is mainly because the large retail chains prefer to import directly from the producers and thus eliminate the role of the importers/wholesaler. that are functional and not purely decorative.accelerated the flattening of the distribution channels. with respect to products. ethnic products of the decorative type is the large number of small and independent retail stores. However.

as raw material is not only available from local abundant supplies but can be imported as well. Bargaining power of the customers – how strong is the position of buyers. Threat of new entrants Because of growing domestic market. huge demand is there. At the same time. Is there a monopoly in supply side? 2. No other significant barriers Low INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 45 . traditional furniture. Bargaining power of Customers With fast growing middle class and changing lifestyle. industry entry does not require very huge investments.1. Threat of substitute products – How easily can furniture be made cheaper or substituted by other products 5. Aditya Birla Group). Indian Furniture Industry Analysis – Five Forces Model To determine the competitive intensity and thus the attractiveness and opportunities of the Indian Furniture Industry.g. Bargaining power of Suppliers Low. Reliance. in absence of the latter there is a possibility switching to unorganized 3. Industry Analysis 5. 3. virtual office space. Supply side is largely dominated by the unorganized sector 2. Such concepts might take years to come. but can have significant impacts Intensity  High Medium 5. However. small homes. Intensity of competitive rivalry – what is the level of competition among the existing players of the industry 4. Threat of new entrants – How easy or difficult it is for new players to enter the industry? 1. Bargaining power of the suppliers – how strong is the position of suppliers.5. Threat of Substitute Products No significant threat except for the possibility of new concepts like plastic furniture. large business conglomerates are planning to enter the industry in organized sector. Competitive Rivalry Industry shifting from highly unorganized towards organized sector Moderate competition among handful of players existing in organized sector 4. it is important to consider the following five critical factors: 1. Only a limited number of dominant players are present in the organized sector. (E. with imports getting easier day by day Till date.

it can be said that there is more of a positive aspect associated with the bargaining power of the consumers – that is they want to shift to organized sector and have more options from the latter. one might shift to town side shops from the unorganized sector to avail more options in designs or price. but of a medium intensity only. In this situation. options available in the domestic as well as international market. Indonesia is preferred for importing synthetic rattan. Not only the domestic availability. Indian consumer has undergone a change in terms of lifestyle and purchase behavior. However. Today‘s affluent Indian consumer is ready to spend extra to buy as per his/her aspirations.1. Bargaining power of Customers As discussed in the earlier sections. unlike the finished products supplies. However. has access to many information sources including worldwide sources like internet. Therefore.1. In fact. For e.2.A detailed analysis of these five forces determining the competitive intensity and attractiveness of the Indian furniture Industry is provided below: 5. Overall. Bargaining power of Suppliers In terms of raw material. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 46 . cane and MDF (medium density fibreboards). He/She is aware about the latest trends/fashion. they cannot always do so because there are only a limited number of players in the organized sector. It is no more difficult to import the raw material of your choice. Malaysia is known for its Rubber wood. There will not be a significant threat of consumers buying from unorganized sector if there will be more players in the organized sector. Given these characteristics. Even though when consumers want to purchase branded furniture to ensure in terms of quality and reliability.g. at the same time there are limited options available for the consumers from the organized sector. 5. knows the best deal and is more knowledgeable. the raw material supply industry is yet very far away from shifting towards the organized market. Indian consumers have the right to choose from the various options available for him. it can be said that they have it. India as a country has abundant raw material supplies for this industry. To comment on the overall bargaining power of the consumers. it can be said that the raw material suppliers have low bargaining power. but the easier imports of raw material also lower the bargaining power of the suppliers.1. Similarly. there are countries that specialize in different categories of raw materials.

to sum up. rapid and day-by-day increasing growth of the organized sector. 5. convenience. there is a possibility of other concepts of furniture usage coming into picture and affecting the current product basket. Especially those.1. Nevertheless. Competitive Rivalry Today also. there has been a recent. the industry might also think of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 47 . Therefore. these new players have not faced a tough competition because of following factors:  Growth Stage: Organized sector of this industry is still in its growth / unsaturated stage and it will still take a significant number of years for organized industry to reach up to a saturation level when all the products segments of the industry would be tapped by one or the other player o In the current scenario. a handful of players have mushroomed in the latter segment of the industry. That too. the proportion of Indian population that wants to buy branded furniture is increasing day by day. easy to maintain etc.5. unorganized sector takes away the major proportion of the overall Indian furniture industry.3. Godrej in office furniture. However. can motivate the new and young homemakers of India to buy plastic furniture. with 90% share. each of these players still have a scope to expand to serve to the wide spread needs of the country  Growing Demand: Given the higher disposable incomes and other lifestyle related changes mentioned in the earlier sections. Style Spa in bedroom furniture. Considering this.g. Durian in living room furniture. plastic furniture has grown and taken a share in living rooms of most of the Indian households. Factors like lightweight.1.4. For e. who do not have a permanent residence and keep shifting their locations. On the other hand. This huge demand and lesser number of players in the organized sector has been the reason behind insignificant competition among the existing players. the internal competitive rivalry can be said to have a force of moderate level on the overall attractiveness of the furniture industry. there is maximum one player having a significant presence in one product segment. Threat of Substitutes There is no significant threat of furniture being replaced by other products as such. Given this. will prefer such options. These changes / new concepts can be:  Plastic Furniture: With time.

There will be tendency of staying in smaller homes.  Concept of Virtual Offices: Following the trends of western countries. This kind of change. especially in the organized sector. For example. this might not be the case in coming years.1.  Small Homes: In the current scenario. India is also catching up fast with the work from culture. This will lead to sharp decline in furniture demand. demand for office furniture will go down substantially. bathroom) might catch up. – Reliance and Aditya Birla Group – details are as follows: INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 48 . all these above-mentioned concepts might take ample number of years to percolate and have an effect on the industry. the demand is growing exponentially but there are only a limited number of players on the supply side. However. it might happen in future that most of the knowledge sector companies follow a concept of virtual office. most of the middle class families of India reside in a house with five rooms.5. which includes two bedrooms. In that case. Threat of New Entrants As explained above. one kitchen and one bathroom. 5. Along with the increasing demand. Given the higher prices and space constraints. Concept of studio apartments (apartment with one big living cum bedroom with attached kitchen. one common room/living room. However. which might take years to come. some of the known and big business houses of India have already taken steps to foray into this industry. Given the high rentals and huge overhead costs of running an office. also make this industry vulnerable to new players. other factors like comparatively low capital investments. easier imports etc. might sweep away the traditional household and office wooden furniture.innovative ways to come up with high strength and designer plastic furniture. This provides a fine opportunity for new players to enter the industry. affording big homes will not an easy option for most Indians. Given this.

This threat of new entrants also can be taken care off by adopting appropriate actions in terms of tying up with right players of the industry. It plans to add one more furniture store in Hyderabad by early 2009. Here we offer an extensive range of 60. where two stores from furnishings and furniture segments would be co-located." Birla said. marketing with right positioning platforms. Except for the threat of other new entrants. which opened its first furniture store — Reliance Living Furniture — in Delhi. electronics.Reliance Retail to set up 100 Reliance Trends stores by 2011 . every household product for the woman of the house. For interested players. The retail arm of Aditya Birla Group. To summarize the above analysis of the industry. there is no significant threat. The company plans to have five more stores by end of the fiscal in March 2009. apparel and what-have-you for the husbands and wives to shop together. "As you walk through the Megastore.The Delhi store has been set up under the label of ‗Reliance Living‘. 250-300 crore to expand its retail business and set up at least a dozen hypermarts across the country under the brand name More Megastore in the coming financial year. you will find an excellent toys and stationery mart for children. This provides a very attractive opportunity for Thai companies to enter the organized sector of Indian furniture industry. mobiles. it can be said that there is huge demand but limited number of dominant players. Aditya Birla Retail Ltd (ABRL) has announced plans of investing Rs. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 49 .000 products catering to every need of a household." he added. a live bakery and a cozy café for parents to relax. this report. our destination hypermarkets will cater to monthly and event-based shopping requirements. setting up most suitable distribution channels. targeting the most apt class of consumers. is also looking to expand the format while synergizing it with home furnishing format. "While our conveniently located neighborhood super marts all over the country provide all the daily and weekly shopping needs. furniture. Reliance Retail. including two more in NCR and two in Hyderabad. The More Megastore is a one-stop shop for the entire family. at the end also consists of a set of recommendations with suggestions on all the above-mentioned factors. besides making a foray into furniture segment and adding more stores for home furnishings.Reliance Retail plans to set up 100 Reliance Trends outlets by 2010-11. The company is also expanding its newly launched Living Furnishings format.

2. diversified and supportive retail infrastructure Diversified product range that service different market Low barriers of new entry Abundant and cheap labor hence can compete on price Low capital investment and high ratio of value addition Aesthetic and functional qualities Variety of products categories Exporters willing to handle small orders Increasing emphasis on product development and design up gradation Strengths SWOT Analysis Indian Handicrafts & Decorative Industry Weaknesses            Lack of infrastructure and communication facilities Unawareness about international requirements and market Lack of co-ordination between government bodies and private players Inadequate information of new technology Inadequate information of current market trends Less interest of young people in craft industry Lack of skilled labor Still confined to rural areas. small cities.5. Indian Handicrafts & Décor Industry – SWOT Analysis           Large. and untapped market Lack of promotion of products Inadequate market study and marketing strategy Capacity to handle limited orders INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 50 . diversified and potential market It has strong.

South Africa. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 51 .  Craft producers have to compete on price. Inadequate supply chain management and distribution reduces the sector‘s commercial viability and economic sustainability.   Inappropriate energy supplies to rural and sub-urban areas. Real Estate that offers great requirements of handicrafts products Development of domestic and international tourism sector E-Commerce and Internet are emerged as promissory distribution channels to market and sell the craft products Large discretionary income at disposal of consumer Growth in search made by retail chains in major importing countries for suitable products and reliable suppliers Developing fashion industry requires handicrafts products Opportunities SWOT Analysis Indian Handicrafts & Decorative Industry Threats   Quality products produced by competing countries like China. some part of Indian market is still untapped and market is price sensitive.  Products are high priced in big and metro cities. Increased and better technological support and R & D facility in competing countries  In spite of having diversified products. quality and delivery for different segments. which are beyond the reach of people belonging middle and lower middle class.      Development of sectors like Retail.

middle and upper – middle class as well. focus group discussions (FGD) were conducted across India as a part of this study. A brief profile of the respondents identified for these discussions is given below:   SEC* A1. which is done based on the educational qualification and occupation of the chief wage earner of the household. considering the role of males as chief wage earners and financer in most of the decisions. Detailed findings from these FGDs are as follows: 6. Objective of the FGDs being capturing the consumer behavior. across two age groups – 25 to 32 and 38 to 45 years SEC A1. respondents were asked for their inputs on various behavioral and perception based aspects with respect to buying household items. As per the scope of the study. and especially in case of furniture and furnishing. This concept is not only gaining importance in the upper class of the society. A2 and B1 males. However. there was a special focus on four product categories – INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 52 .1. they have a significant role. This qualification criterion enabled the respondents to answer and discuss the information areas more appropriately by linking their thoughts with their last purchase.000 (Twenty Five Thousand Rupees) in last six months.Each respondent should have purchased furniture worth at least or greater than INR 25. one more qualification criterion was applied within the above-mentioned profile of respondents . A2 and B1 working females and housewives. out of nine FGDs. Consumer Insights The recent trend in the Indian consumer mindset is ―the concept of good living‖. Thus. To understand the in-depth consumer behavior associated with home furnishing purchases. at the same time. but it is catching up fast with the middle . one FGD was also conducted with working males. playing a role of chief wage earners in their households between 38 and 45 years of age *SEC refers to socio economic classification. Respondents Profile Based on exploratory study. In order to get responses that are more accurate.6. this fact was vetted that females play a major role in most of the household purchases. these FGDs were conducted in such a manner that there is a considerable representation of both the categories of women – workers as well as homemakers.

Utensils and Plastic products. These behavioral sciences help answer questions such as why people choose one product or brand over another. not all decision processes lead to a purchase. The purchase decision process is the stages that every buyer passes through in making choices about which products and services to buy. All consumer decisions may not always include all stages. lies a decision process. Purchase Decision Process – An Introduction Behind every visible act of making a purchase. how they make these choices. Following part of this section outlines the findings from these group discussions for the furniture and Home Décor products. Need or Problem Recognition Information Search Evaluation of Alternatives Post Purchase Behavior Purchase Decision Consumer purchase behavior with respect to Furniture and Home Décor products is explained below with the help of above-mentioned process: INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 53 . 6. Understanding or investigating this process is necessary from the point of view of understanding the mental and social processes that precede and follow the purchase actions. The figure given below represents the five common stages of any buying process. In addition. Home Décor products. depending upon the degree of complexity and level of involvement in the product.2.Furniture.

Delhi Other than these two occasions. It was observed that most of the furniture purchases are made  While setting up and decorating a new residence or While renovating a residence “I can also buy furniture whenever there are attractive discount offers in the market. In this study. there is limited space in household.1. the major reasons identified for home furnishing purchases as identified in a study that was conducted in early 2008 to understand the consumer buying and spending preferences with regard to Home Furnishings are shown in the adjoining figure. furniture purchases are always need based. SEC B1. Delhi “Last time when I bought furniture. furniture is purchased in any of the following cases – old furniture goes faulty. As expected. SEC A2. two surveys were conducted – General Survey with approximately 3000 respondents General Survey Luxury Survey from the middle class and a Luxury Survey with around 1000 affluent customers from Source: The Home Furnishing & Décor Report 2008 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 54 .6.2. Furniture – Given that. we were shifting to our new home and I didn‟t want to carry any old items there” Homemaker. people end up changing their furniture. for gifting in daughter child marriage and sometimes due to attractive offers available in the market during festive seasons like Diwali. In addition. Problem Recognition / Need Awareness Stage This is the stage when consumer recognizes a problem or need.” Homemaker. The need can be triggered by internal stimuli when one of the person‘s normal needs rises to a level high enough to become a drive.

example – Laughing Buddha. whenever I like I just pick up. As can we see from the figure. the major reasons for such purchases are redecorating or renovating existing homes. 6. Other then such on the spot purchases. reliability of brand “For decorating home. Vaastu or good luck plants. a customer buys home décor products in a planned manner at following occasions –  Whenever such products are to be purchased for ‗vaastu‘ or ‗fengshui‘ purpose. some of the stages of the above mentioned decision process is followed.the upper class. in an unplanned manner based on urge created by liking a product very much. Information Search This is a stage in which the consumer searches for information. In case of furniture. this stage is followed in case of furniture but not that much applicable in home décor products. If I am with my husband. never plan. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 55 .2.2. Therefore. Interior Decoration Items – Considering the low level of utility/purpose of home décor products. Impulse buying refers to buying decision made immediately. The consumer may simply have heightened attention or may go into active information search. he should be ready to spend. wind chimes etc   When need arises to buy for gifting purpose While decorating a new home or redecorating a home during Diwali or Marriage in a home Although most of the decisions are impulse. SEC A2. This is usually done on higher value purchases. I have no other considerations while buying” Housewife. I buy on the spot. information sources that are referred the most are as follows:  Internet – Websites of the manufacturers and retailers. and based on consumer responses in the discussions it is understood that these products can be categorized under impulse purchases. websites about latest trends and lifestyle  Word of Mouth – for collecting information on aspects like quality. if the product is of high value.

When respondents were asked to select the main reason. as this is the only platform for gaining knowledge about global designs. quality and trends Sometimes customers also gain information on the new products designs. identify internet/websites as the source they use to help decide what and where to make their next big-ticket furniture or major appliance purchases (shown in the adjoining chart). 25 percent indicated the cost of home delivery as the main reason they would not purchase online. it was also observed that of the consumers who say they research furniture and appliances online. and brands by going and seeing the displays at places like clusters of furniture malls. Referring to the same study. price. Print Media – Newspapers and Magazines – mostly referred for knowing the brands. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 56 . As per the findings of Home Furniture and appliances survey conducted in March 2008. they would not make their next home furniture or major appliance purchase online. window-shopping is also an important source of information. 31 percent indicate that they expect to also purchase online. discount offers or schemes available  Trade fairs and Exhibitions – to know more about products from other countries. departmental stores etc. the majority of customers. 54 percent of respondents said it was the need to see the actual product. offers. 53 percent. In other words. shopping malls.

Delhi In this stage. Investigation of this stage leads to the understanding the most important and in-depth aspects related to consumer behavior. It‘s only from these international trade fairs that customers become aware of the products or specialties of other countries and if they like it. the three most popular decorating styles based upon how the consumers' homes are currently decorated are casual. there is no such stage of information search phase. the information collected in the above stage is used by the consumer to evaluate alternatives. while I was in a trade fair. This stage involves weighing different product attributes and their ability to deliver benefits.” Homemaker. Sometimes.3. durability of the furniture also takes in the first position along with aesthetics as far as important parameters are concerned. how does it appear in the first looks. they buy also. Before this I never knew about Thai products. As identified in the Home Furnishing and Décor Report 2008. Parameters identified as important to consumers while buying furniture and interior decoration items are as follows: Furniture – When it comes to Furniture and related home accessories: the first thing the Consumer will look for is the Aesthetics along with Durability. Since furniture is still considered to be a product for long term utility.2. visiting exhibitions become the source of information and point of purchase as well. yet the first factor influencing the buying behaviour will be its looks. I saw very beautiful products from Thailand. SEC A2. The luxury consumers tended to show less of a preference for casual and rank traditional and General Survey Luxury Survey Source: The Home Furnishing & Décor Report 2008 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 57 . 6.In case of interior decoration item purchases. traditional and contemporary in that order. Evaluation of Alternatives “Some time back. I picked quite a lot from there to decorate my home. Furniture though has a purpose.

These are listed below:    Bed: 14000 – 28000 Rupees Sofas: 20000 – 50000 Rupees Full Bedroom Set (Bed + Wardrobe + Dresser + TV trolley): 28000 – 52000 Rupees Another factor which is considered as important is After Sales Support. Indian customers are now ready to pay an extra buck. SEC A2. Price affects the decision but does not impact much as compared to other factors like durability and designs. but not ready to compromise on quality. as this is imported from some other country” . Working. does it have storage capacity. It should not happen that if I am buying imported furniture and I face some problem and if I go back. Overall few statistically significant differences are found in terms of home decorating preference. They want the company to take care of the furniture whenever they shift places. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 58 . the secondary functions like multifunctional. storage etc. customers have developed resistance for buying imported furniture until and unless it comes with a warranty period and long buyer – seller relationship advantage. For example – Is it a sofa cum bed. 30.contemporary styles higher in their overall value system. Second most important parameter is the Functionality. the shop keeper tells me that we are not responsible. Thus. will come up. As most of the players who are selling furniture imported from other countries. Bangalore as a negative point or limitation for buying imported furniture. Number of Family Members and average guests visitors at a time. should come with at least one year of warranty. Based on the customer inputs. many times this factor acts “Furniture should be durable. whenever furniture needs repairs or services like making the furniture termite resistant. do not have a support system to take care of the after sales aspects. Having satisfied the primary functionality that is seating or sleeping. This factor will influence the type and size of Furniture Purchase. The other styles included in the survey are shown in the chart.Married. price bands of main home furniture products have been identified for the middle and upper middle class. Reason behind this is that furniture is a Value Additive and Long Term Use Product. Customers do not want to limit their transaction up to buying a product. What is the seating arrangement required in the house.

Factors like quality. in some cases. Therefore. at the same time. Buying from such established shops or malls gives them a satisfaction in their subconscious that if something goes wrong then somebody would be there to take care of their furniture. which sometimes become difficult to afford. and @Home. the key take out is that if a new player wants to enter in the market. it should establish itself in India in a full fledge manner with its own showrooms across the country. some considerations are there depending upon the type of product category. Tangent. Home Town. there is a perception among customers that branded furniture comes with a package of additional costs. Interior Decoration items – As mentioned earlier. Furniture Walla. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 59 . In general. However. the factors considered while buying home décor products are Price (should not be too expensive) and Aesthetics (look and design). Home Stop. Thus. it can be said that brand is an important indirect parameter fulfilling the expectations related to factors like quality and warranty. durability and brand are not relevant in this case. where the products being considered are of high value.Significance of Brand as a consideration parameter while buying furniture – recent shifts in customers buying preferences includes shift from unbranded towards branded furniture as a major trend. Branded furniture as defined by the customers is furniture available at malls or shops like – Durian. so this stage of buying process holds less relevance. most of the purchases in this category are impulse purchases. However. with exclusive product designs and position itself as a brand which will be always there to support it customers.Quality and After Sales Service. Reason for preferring brands is again related to the two factors mentioned above .

it was a joint decision between me and my husband. all three of us who went and bought it” – Housewife. However.4. if imported – which country.2. type of wood – Husbands Decisions related to price / budget – Joint decision. but in case of joint families. the role is clear. considering that furniture is a high value and long-term investment. this role shifts accordingly. purchase decision is made. 38. It is very important for any company to target the person who takes this decision and one who plays a major role in influencing this decision. Based on the various factor considered and evaluation of alternatives. In case of nuclear families. equal role of both husband and wife “Last time I bought furniture. Finally. furniture purchase decision is mainly in the hands of the woman in the house.6. The roles can be divided as follows: Decisions related to design. SEC A2. color. in either case – be it homemakers or workers. Objectives of these focus group discussions also included identification of the decision makers. These findings are as follows: Furniture – Given the fact that Indian homes are still a place to be managed under females. Purchase Decision This stage mainly includes following decisions . while elder women (mother in law) also plays a major role. husbands are the influencers and their influence matters to such an extent that the decisions can be termed as joint decisions.) – Wives Decisions related to point of purchase. sofa cum bed etc. influencers and most preferred points of purchase. it is of critical importance to market it to the right person and from the right place. fabric (in case of upholstered). For marketing any product successfully. functionality (bed with or without drawers/storage boxes. domestic.Where to buy and What to Buy. women of the younger generation take the decisions. we had to change our decision at the end because we were buying study table for our son and he did not like the decision. Ahmedabad INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 60 . imported vs. Depending upon the family composition. In addition.

some of these products are purchased from vaastu / charm / good luck perspective. Home décor products – Since. In such cases only. It was identified that the services of a home decorator or designer are a luxury of the affluent. In the general home survey some 12 percent overall used the services of a decorator. Some 20 percent of the luxury consumers reported using the services of a home decorator or designer in the past year. vaastu experts or interior decoration consultants influence the decisions. interior decorators also play a major role. Home Town. other than husbands acting as influencers in all the purchases. Examples of such companies as given by customers include names like Style Spa. customers prefer to buy from wellestablished brands that are there in India since years.Use of Home Decorators or Designers: In addition to the above roles played in traditional Indian families. they will be there. Godrej. I know if I need their help in future. 41. in some cases. General Survey Luxury Survey Source: The Home Furnishing & Décor Report 2008 As far as decision of point of purchase is concerned. SEC A1. Delhi INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 61 . and Durian etc. customers will always prefer to buy from companies that put their brand name on imported products and are accountable for the after sales support. Thus. As mentioned earlier. They will not vanish like any other small one off kind of showroom of imported furniture on gurgaon highway. and Style Spa. “I would prefer to buy from brands like Home Stop. these are impulse decisions. some of the affluent and upper class families have involved themselves in getting their homes decorated by interior designers and architects. trustworthiness in terms of after sales support like repair and replacements drives the decision. depending upon who has liked the product buy it. Durian. I can‟t trust those shops” – Husband. In case of imported furniture. Thus.

etc.Satisfaction or Dissatisfaction.6. Shortly after a purchase customers develops Cognitive Dissonance.5 Post-Purchase Evaluation Any transaction between a buyer and seller does not end when a product is purchased. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 62 . Based on the experiences of using the product. real outcome of the transaction come . after sales communication. This is the buyer‘s doubts about whether it was the right decision or not. support provided by the seller. Such post purchase effects can be reduced by taking appropriate steps like warranties.2.

Sometimes bought for gifting purpose or if suggested by Vaastu experts Information Sources Furniture – Newspapers. Kids influence for new trends and designs. Need Trigger Sometimes for occasions like Diwali or Marriage in the family Interior Decoration – Mostly impulse purchases. Wife plays a Purchase Decision major role. Purpose.Learning from Consumer Insights . Sometimes. Word of Mouth from Family or Friends Interior Decoration – Trade fair / Exhibitions Furniture – Aesthetics. Quality. while renovating a house. Price. buys. if the product is very expensive. After Sales Services / Warranty Period Alternatives Evaluation Interior Decoration – No such considerations. Trade Fairs / Exhibitions. look and feel of the product matters. Furniture – Customers look forward for provisions like warranty. Husband can influence in terms of spending or budget. price can be a constraint Furniture – Joint decision between husband and wife.Summarized Furniture – While shifting to a new house. Preferred to be bought from well-established brands or chain of showrooms Interior Decoration – Who likes it. Magazines. Post Purchase Behavior support in disassembly and reassembly while shifting to new home and after sales communication is expected from the seller INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 63 .

6. more traditional in his approach. value systems. designs are attractive and eye catching. newly married. will spend weekends shopping” * As a part of the Focus Group Discussions. its like China present in low end as well as high end furniture” “I think products from Thailand are very much affordable” Lifestyle Association* “A Person buying Thai products (furniture) would be a person. A summary of responses is given in the box above. I did a lot of shopping because I could afford most of the products there.” “Comparing with other countries. But in some. working in call centers. would shop from places like malls. would like to spend weekends with family members” “A person buying Chinese furniture will be again young. motives and perceptions of the customers. affluence. it is better than China and India. and would like to spend his weekends either shopping or travelling” “A person buying Indian furniture would be middle aged.3. but behind other countries like Italy and France” “Thailand has amazing and very beautiful designs of artificial flowers and paper crafts” In terms of Price “While I was on a trip to Thailand. mostly bachelors or newly married. weekend spending pattern. respondents were asked to describe the latter in terms of age. working with MNCs. unlike Dubai. Projective techniques are used to understand the in-depth feelings. they are innovative. who is young. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 64 . experimental in approach. (B) Person buying furniture from China and (C) Person buying Indian furniture. hobbies etc. Based on their imagination of the above-mentioned three personalities. Customers’ Perceptions about Thailand In terms of Product Quality & Designs “Thailand offers more variety in designs. like decorative items Thailand is costlier than India. where I could not buy much” “I think Thailand is present in all price ranges like China.” “In some product categories. lifecycle stage. like furniture. respondents were put under a projective technique of imagining and describing the lifestyles of three different personalities – (A) Person buying furniture from Thailand.

So.1. Thailand is seen as a country with a status quotient attached with its products. following are the key recommendations with respect to the four potential market entry segments. How to Enter the Four Market Segments Based on above analysis of the Indian furniture and Decorative items industry. Customization Entry Strategy Distribution Route Target Segment Critical Success Factors However. High Quality. Either India is a complex country Household Furniture – High End Segment with cultural variations after every 500 Kms. Recommendations for Thai Investors 7. Market Segments Key Take Out from the Market Study Middle class and Upper middle class are expanding. Strong Logistics Network. After Sales Support. considered as a Household Furniture – Low End Segment price competitive country.middle and Upper middle class of India is ready to pay extra buck in order to ensure durability Tying up with existing Imports Retail Chains – Hypermarket Format Middle – Middle Classes Competitive Prices. Perceived as a shopping destination of moderately affluent class of the society INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 65 . Availability. Well – Established Brand Name. Better packaging.7. Warehouses in Tier 1 cities. Establishing own retail chains – Specialty Store/Home Improvement store format Upper Middle Class Product Innovation. it is important to gather information about the market first through Joint Venture or step by step entry by establishing only a liaison office first Middle . Exclusive designs.

in this segment Thai investors should build up in terms of branded and high design furniture. Handicrafts & Décor Products Positioned as a country with delicate. it is important for any entrant to understand the market first. Entry Options (a) High End Furniture Segment – The focus of this segment will be value. Buying and Selling Imports Agents. distribution and brand building strategy is provided below: 7. Brand Name and After Sales Support Institutional Customers look for brand names that can compliment with their own brand name Indian customers are now spending more on Home Furnishing Large Product Assortment. will grow at 20% CAGR in coming Office Furniture four to five years Joint Venture / Medium Scale Firms Direct Selling and Marketing Tie ups with Builders and Architects Service Industry (IT and BFSI Sector) Mid Size Offices Timely Delivery. it is more appropriate for global players to enter India INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 66 .1.Office Space in India is growing rapidly. not volumes. it would be of critical importance for the investors to understand the market deeply in order to build a strong position. Ethnic / Culture based Positioning Among Indian customers. Given that India is a complex country and there are strong cultural variances leading to different taste and preferences. Better Packaging. However. Product Exclusivity. Warehouses and connectivity through strong Logistics Network. Thus.1. attractive and ethnic products in the handicrafts and décor industry Thailand is perceived to be price competitive wholesalers A detailed description of the entry. Especially. through Middle Class Large Volumes.

The firm also employs sub contractors for installation of its furniture solutions. This may be extended from time to time.through partnerships like joint ventures. Financial resources availability of the Indian partner Established contacts of the Indian partner that help smoothen the process of setting up of operations Or else. the entry process can be divided into two steps for better understanding of the market. Presently. An example of such an approach is explained below: Case Study – Teknion. Teknion plans to maintain an assembly unit with standard furniture and standard product ranges. Teknion also plans to establish a new showroom and a joint venture with Indian distributor. In the longer term. Presently. As volumes based on price competitiveness would matter more than brand name or other criteria. Mumbai and Bangalore. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 67 . Liaison/representative offices can be set up as an intermediate step before entering on the own or through a joint venture. Typically. The role of such an office is to gather information about the possible market opportunities and provide information about the company and its products to prospective Indian customers. the liaison office is not allowed to undertake any business activity in India. Rather than putting high investments in setting up own infrastructure. New Delhi. Teknion‘s aim in India is to establish itself as a leading designer and promoter of high quality furniture solutions. Setting up of operations through a joint venture will lead to the following advantages for a foreign investor:    Already established distribution/marketing set up of the Indian partners. Teknion employs permanent employees for its operations in India. Teknion imports furniture from its Malaysian operations. benefit should be taken from the already established organized retail sector of India. This company initially established a liaison office in India and the company‘s operations were focused in Chandigarh. Thai manufacturers can just import their furniture here and get good margins. Hyderabad. It has an after-sales service function that includes reconfiguration and new orders. A liaison office in India is permitted to carry out only specified activities and the permission for the same is given for a period of three years. (b) Low End Furniture Segment – Motive of Thai investors in this segment should be to serve to the middle class masses and play on volumes.

Thailand has a better option to play on volumes rather than value.1. Distribution Distribution or supply chain management is critical for furniture manufacturers for catering to both. it should have a strong logistics network to expand. Thus. Thus. the most critical factor will be availability . Last but not the least. In case of high value products as well. which at the back end is supported by its mother warehouses and twenty other small warehouses across India. The critical success factor in this case would be to make the product easily available in at least the top 20 cities of India. Style Spa‘s one of the strength areas is availability of its furniture stores throughout India. (d) Décor and Handicrafts Products Segments – Based on its positioning as a country with reasonable priced handicrafts and decorative products. Indian furniture industry has now become a part of the fashion industry. this route of entry shall be more beneficial.to cater to India’s diverse customer needs and a spread-out market.(c) Office Furniture Segment – As mentioned earlier. the home and commercial segments. 7. which have a strong regional presence and have good furniture designs. which includes both office and hotels. but logistically it is not possible for them to reach in all the parts of the country. the key requirement would be to ensure timely deliveries and satisfaction in terms of value for money. if any company wants to expand.2. For the home segment. Therefore. where the affluent and high-income middle class of India resides. it is very important to make the right thing available at the right time. The challenge would be to do the same without adding to inventory or costs. logistics also play a very important role. There are some players. Such requirements can be taken care off by having appropriate and required investments in the infrastructure as well. in this segment it would be critical to tie up with an already existing and well-established brand name that fits fine in the customers‘ mind. company needs to have its own warehouses at least in all the top six cities of India otherwise timely distribution becomes difficult. In case of the commercial segment. key criteria of the customers in this market segment would be that they would like to buy furniture from a brand name that will compliment the consumers own brand. For example. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 68 . Therefore. the aim should be to cut on huge investments of establishing own infrastructure and enter India through imports route.

such activities are helpful mainly in the home furniture segment.1. Thus. Examples of promotion activities by one of the major players Durian – Twice in a year Durian offers its customers flat 60% discount on all the products available in all its stores. package options for doing the entire bedroom/living room. still being a traditional country. The same can be done through various routes – Print Media. This is applicable in case of both institutional as well as individual customers. India. the next step is to build the brand value. In recent times. it would be helpful to focus itself as a company with good quality furniture and a company which shall be available for after sales services as and when the need arises. Individual Customers – This segment of customers is also price sensitive. As far as promotion is concerned. but quality and reliability factors play more important role as compared to price. Interactive Media and Trade fairs or Exhibitions. Institutional Customers – As institutions. Such as discounts. be an office or hotel. follows many old rituals of buying new things or renovating the house around auspicious occasions like Diwali or a marriage in the home. latter being the most appropriate method for introducing a new brand or product from a new country. At the same time. it would prefer to have its infrastructure. Other than this. Brand Building & Promotion First step for any new player is to create awareness about its products in the market. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 69 . should position as a well-known brand available at optimum value for money. Durability and Trustworthiness. Once the customers are aware about the presence of a particular product or company. any player wanting to focus in this category.7. new product introductions. such kind of promotions would be more helpful in Diwali or Marriages seasons. Well-known brand names are looked up to in this category as well to ensure Quality. this segment of customer is price sensitive. interior and furniture that compliments or enhances its own brand.3. brand as a buying decision parameter has gained significant importance in the consideration sets of the customers. there is one or the other item that is provided free of cost to the customers. These free products are mainly accessories and home décor products like lamp etc. Therefore. interior decoration products or accessories free with furniture. Various methods that are prevalent in the market can be adopted. For any player wanting to focus on home furniture.

The findings of the above analysis are as follows: Market Segment Market Attractiveness Main Criteria / Advantages Huge target customer base. There is no need for macro-investment. Office Furniture  growing at a fast pace (20% CAGR). Huge demand but limited supply from organized sector Office Segment of India is in a booming stage.7. This ranking has been done based on the various criteria.2. Market Attractiveness Along with the above-mentioned entry suggestions in the four product segments. Minimum efforts and investments Household Furniture – Low End Segment  required for market development (entry through JV and distribution through existing hypermarkets) and promotion. Limited number of sector strong players in the industry. providing an opportunity to make good margins Increasing Affluence of Indian upper middle class. No strong industry player in this segment INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 70 . Products Handicrafts & Décor Products  are present throughout the low value to high value added band. advantage in terms of volume. customers are ready to pay an extra buck for better quality and designs. such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc. Household Furniture – High End Segment  Given higher disposable income. an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these.

65% of their business comes from Bedroom furniture Strength of Style Spa – its nation wide presence o With 90 style spa showrooms. Similarly.middle class of customers 71 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY .1. Annexure 8.  Style Spa as a company targets middle .middle and upper . present in 145 cities across India   Style Spa and Zuari‘s combined last year (07-08) sales – 120 Crores Only manufactures bedroom furniture.1. Style Spa positions itself as Bedroom Furniture Company. living room furniture (sofas.8. which are not their exclusive stores. Style Spa Company Profile        Indian furniture products limited is manufacturing company and Style Spa limited is the marketing company Is one of the largest manufacturer and pioneer in panel based furniture Manufacturing facility is 14 kms from Chennai Company owns 90 exclusive stores which makes it the largest chain of furniture showrooms in India Also sells furniture under the brand name of Zuari through dealers. dining tables) are imported – o Imports from Malaysia and China o Rough break up of sales – 65% manufactures. dining table and centre table with glass and metal we are again importing from China only o From Malaysia. present in all states of India o Similarly in case of Zuari. style spa is importing chairs and dining table made from rubber wood. Annexure A: Profile of Major Players in the organized sector of Indian Furniture Industry 8.1. 35% imported o Half leather and full leather sofas we are importing solely from China.

Godrej Interio        Godrej Interio is primarily into furniture – both home and office Also serves some special segments like navy. This includes only bedroom furniture . new product introductions. which is bedroom furniture. by name of Interio franchisees located in tier 1.1. bedside tables. package options for doing the entire bedroom. Such promotions are done in Diwali and marriage season. We are not into manufacturing of chairs or sofas or dining at our factory. entertainment units. 8. These can be multi brand stores.5 percent of the above amount Two type of distribution models: o 58 Own retail Stores – by the name of Lifespaces. wardrobes. laboratories / provide customized services also depending upon customer needs Godrej – present in all product categories (focused more towards office furniture) Godrej is present in all price ranges – Premium. that is by 2011 o When expanding. these are only imported. Current dependence on the factory is 65%. o Reason to grow more on imports is higher margins on imported products o For their strength. value for money. dressers. this dependence on the manufactured furniture will go down to 45-50%.beds.  Expansion plans o Sales target for 2008-09 = 140 crores o Targeting 400-450 crores in next three years time.  Promotion activities undertaken: Discounts. 00. Godrej largely sells home furniture through this model o Franchisees – More than 500 in number.000 units furniture per year. computer tables and study tables.2. this model sells both office and home furniture INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 72 . Production capacity of the factory – 2. import component will go up. Style Spa will continue to depend on its factory only. while the company expands. economical Godrej Sales 2007-2008 – 800 Crores (2/3rd office furniture) Exports – 2. 2 and 3 cities. TV trolleys.

2+1+1 for Mumbai or 3+1+1 for Kolkata      Break-up of Durian Showroom sales: 60% Household and 40% Office Furniture 98% of Durian‘s Sales is imported furniture and only 2 % is manufactured Durian is mainly importing from China – 50% Remaining 50% from other countries. PVC doors. Hyderabad and Bangalore. Out of 43. 30 are owned by Durian. Conference table and Book Shelves Household category – Almost all types of household furniture. o Project sales – This model is mainly to cater to institutional customers. Durian         Durian is mainly into manufacturing of plywood.1. Durian has project offices in all the major cities like Delhi. modular workstations Last year (2007 – 08) – Approximately 100 Crores In case of office furniture. Durian mainly caters to the needs of the individual customers. Spain. Italy Also into manufacturing – only for some categories of furniture . these dealers are authorized exclusive dealers. Spain and Italy Two types of Distribution Channel o Through retail showrooms – 43 retail showrooms of Durian are present across India. mainly Thailand and Malaysia. 3+2+2 for Delhi. Material that is imported is stored in warehouses and then distributed to showrooms all across India. Durian has limited presence – Office table.g. Depending upon the gap of demand and supply (furniture already available in warehouse) import / manufacturing decisions is taken.chairs. China. Some INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 73 . By this route. Orders are generated in these project offices and their demand is communicated to Mumbai head office. Office chair. Durian offers different customized options depending upon the regional preferences. decorative veneer 1998 onwards Durian is in furniture trading Import furniture from Malaysia. and they cannot sell other brands. However.8.3. Dealers own remaining 12-13. Thailand. Little bit from Taiwan. For e. strong in leather sofa category Actually in case of sofa sets. most of the players have a set pattern of selling 3+1+1 sofa sets.

Then as per the orders.2 lakhs sqft area) in palgaon (100 Km from Mumbai).of the material is manufactured.Families with at least Rs 40. There is one more warehouse in Delhi for meeting the demand of 6-7 retail showrooms in Delhi.  Durian has a main/central warehouse (2. table stands. arrangements are made for the logistics and material is finally sent to the destination showrooms. part is imported (depending upon demand of the project).upper middle class . anything related to home décor INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 74 .   Durian‘s target market . Orders from different showrooms come to the central warehouse through their ERP system.000 of monthly income Promotion activities undertaken by Durian o Up to 60% discount twice a year o Free Accessories of 10% amount of bill amount. Accessories like table lamps.

Role of Wooden Handicrafts Industry in Indian Economy The wooden handicrafts industry plays an important role in the Indian economy. a small-scale industry is defined as an industry that is:   Not registered under the Factory Act Investment in fixed assets does not exceed Rs. and form an important export commodity of India. sericulture. coir.1. or with the use of simple tools. fine designs. According to the classification of Indian industries. Indian wooden handicrafts reflect unmatched workmanship. The Indian wooden handicraft sector is the second largest employment provider (after agriculture).2. This makes India one of the chief exporters of wooden handicrafts in the world market. Traditional industries like handlooms. khadi.8. Women constitute a large section of the handicrafts industry. 8. Although India's handicraft exports show a consistent increase of sixteen per cent every year. Wooden handicrafts fall in the category of small-scale traditional industries. its share in the international market is not more than two per cent. Indian wooden handicrafts are much sought after the world over. It employs about six million artisans. This industry requires low capital investment and other resources. The wooden handicraft sector provides a high ratio of value addition. including people belonging to the weaker sections of society.60 lakhs Small-scale industries are classified into two categories:   Modern small industries like power looms etc.2. and handicrafts. The term 'wooden handicrafts' refers to a wide range of wooden items carrying utilitarian and artistic value that are made by hand. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 75 . and has emerged as one of the major sources of foreign exchange earnings for India. Wooden Handicrafts Industry – Overview Wooden handicrafts are specialized skills passed on from one generation to the next. and subtle elegance.

There are a number of factors that affect the growth of the Indian wooden handicraft sector. Wooden handicrafts are sold at least three to four times the price paid to the craftsmen.  Production of wooden handicrafts in India is chiefly dependent on the raw materials available locally. Mass existence of craftsmen combined with an excellent production base has failed to aid India towards cashing on the existing opportunities. As a result. its share in world imports is insignificant. while taking up other means of alternate options of livelihood. As a result. They are:  The Indian handicrafts industry is a decentralized one. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 76 .8.2.  The Indian wooden handicrafts sector is plagued by poor marketing strategies. They are also ignorant of the benefits bestowed on them by the Government. they are unable to handle the threat to their industry from machine-made products.2.  Most of the craftsmen in the wooden handicraft sector live below the poverty line. Craftsmen are not independent enough to resort to direct marketing of their own products. Improper pricing mechanisms and the intervention of middlemen deprive the artisans from getting their due. Deforestation comes across as one of the main reasons for the setback in production levels of wooden handicrafts. The artisans work on a part-time basis. and are illiterate.  The wooden handicrafts sector is based in rural India where lack of proper infrastructure and working capital is a major cause for concern. Weak infrastructure leads to delay in delivery and affects the quality of finished products. Factors That Affect Growth Though India is one of the chief suppliers of wooden handicrafts in the world market. the products are not sufficiently remunerative.

INVESTMENT POTENTIAL STUDY INDIAN HOME UTILITY INDUSTRY – UTENSILS AND PLASTIC CONTAINERS INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 77 .MODULE 2 .

at INR 12 billion which is the largest in the total tableware market in 2007-08. the market size of Glassware.. Out of these segments.The organized tableware . The major growth drivers for this industry in India are –  Increasing middle class population  Increasing per capita income  Growth in organized retail  Ownership of luxury products  Openness to Trade  Increasing Hotel & Catering Industry The tableware industry in India can be segmented based on –  Application o Dinnerware. Tableware Industry in India The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. o Beverage Range o Barware Range)  Material used for manufacturing o Stainless Steel – with & without Matte Finish o Ceramic – Bone China & Porcelain o Glassware – Transparent glassware & Opalware).1. Luminarc etc. Based on the application of tableware . and contributes maximum to the sales of tableware manufacturers. Magppie. The organized tableware market which is around 8% of the total market comprises of both domestic players like La Opala RG Ltd.Executive Summary E.market is growing at the rate of 15-20% on an average after taking into consideration the effects of slowdown. Bharat Bone China Ltd. Art d‘Inox as well as multinationals like Corelle.beverage range is the fastest growing product category growing at around 20-25% p. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 78 . RAK Glass.a..

Eagle Thermoware etc. Pearl Pet. The kitchenware. and molded furniture. writing instruments. However. Cello. The major growth drivers for his industry in India are –  Openness to Trade  Increasing disposable income & middle class  Increasing pattern of corporate gifting/ freebies  Increasing storage requirements with increase in working women  Replacing old containers of steel with plastic due to rising modular kitchen concept  Impact of organized retail These factors would enhance the growth of a new entrant in this market if they enter with the optimal set of products after keeping in mind the changing consumer preferences. Ltd. kitchenware. E. The organized plastic container market has few major players who are Hamilton Housewares Pvt..2. Plastic Container Industry in India The consumer plastic goods industry includes household ware. with the increase in gifting trend amongst Indian consumers & growing number of hotels / restaurants. They want quality products. airtight and aesthetically appealing. The changing preference of people for using plastic containers for storage purpose in turn is promoting the growth of this industry. purchase of products in these categories is expected to rise in future. Tupperware.The major sets of customers in tableware are domestic consumers & institutional consumers (hotel/ catering & corporate players). which are leakage proof. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 79 . The domestic consumers at present occupy the largest consumer base for products in this category. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of consumer plastic goods. molded luggage. tableware and household products contribute around INR 15 billion to the revenues of the total consumer plastic goods industry (according to Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003).

Own Stores Factory Multi brand outlets es / Institutional sales Raw Material Sourcing Distributor Dealer / Retailer Customer INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 80 . they should optimally utilize all the available channels for distributing their product i. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. The major set of customers for plastic container industry is domestic consumers & institutional consumers (hotel/ catering & corporate players) with domestic consumers occupying a larger share of the pie. Value Chain – Tableware & Plastic Container Industry E.e. through multi-brand outlets & retailers with minimum number of intermediaries in between to ensure presence across all geographies. through company‘s own stores. Value Chain for Manufacturers – The tableware & plastic container industry in India follows a similar value chain model.3. In order to minimize expenditure at each level of the value chain. Also. thereby enabling the growth of this industry. E.Plastic Container Industry can be segmented as Storage Boxes  Thermoware  Dine ware The plastic container industry is growing at the rate of 12-15% with the increasing storage requirement of people and preference for more aesthetically appealing containers rather than stainless steel containers due to modular kitchen concept coming in place.1.3. reach to maximum number of customers possible and to save on cost. it is very important for the manufacturers to source raw material from a supplier who provided them at low cost and from a near-by source. In case of institutional players.

through retail outlets or directly sell to customers. the major target segment i.3. it is very important that the importer/ subdistributor should be an exclusive distributor of that brand to reduce the bias which arises because of difference in the margins offered if selling multiple brands through a single distributor and they should utilize all the channels optimally to reach maximum number of customers.4.2. They may sell the products through various channels like through a distributor/ dealer. Customer Imports Importers / Super Distributor Retailer Distributor / Dealer Customer Retailers Customer E. However. who are posing threat to an investor in this industry to varying extents.E.1. variety & changing preference for purchase of lifestyle goods. Thus. for a new brand to establish its name in the Indian market. Thus. Tableware Industry The tableware industry is affected by existing competition. middle & upper middle class prefer to purchase products from the organized market due to better quality.4. it is very important for a new entrant to position its products in the Indian market based on the needs of the consumers that are not fulfilled from existing products. However. The major threat posed to tableware industry is from new entrants due to the attractiveness of this industry.e. Industry Analysis E. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 81 . supplier & buyer bargaining power. it can be inferred that there are small number of players in the organized tableware market. new entrants who would be entering this industry and substitute products. Value Chain for Importers – Importers or Super distributors in Indian tableware & plastic container industry can be exclusive distributors or multi-brand distributors. after analyzing the tableware industry in India. Existing competition & substitute products pose medium threat to the tableware industry. whereas the unorganized market is highly fragmented.

with the increase in number of family members and when they need to replace the old tableware. These factors attract foreign investors to venture in this industry.Quality. Aesthetics INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 82 . E.E. the products are evaluated based on the following parameters. Quality. o In plastic storage containers. Many players in the medium scale industry are also selling branded products. Brand. Hygienic. newspapers.This is because of the rise in number of working women. They may also purchase for gifting on occasions like Diwali or Marriage in the family. Maintenance o In plastic storage containers. which will be good for the future prospects of the industry.4.2. Variety. increasing disposable income of people & preference of people for branded & good quality plastic products which attracts new entrants. important from the point of view of foreign entrants are as follows: Need for purchase of Tableware & Plastic Containers o Tableware is purchased whenever the need arise.. Aesthetic Appeal. which can help to boost the production in the future. word of mouth from family or friends are the most common sources of gaining Alternative Evaluation o In tableware. Also. the products are evaluated based on the following parameters . Consumer Insights Key consumer insights. magazines.5. there are access capacities available in the Indian market. It can also be purchased for gifting purpose. Variety. Functionality. the amount of investment required to start the business in this segment is low. Information Sources o For both these product categories. Also. Plastic Container Industry This industry when analyzed through Porter‘s Five Force Model revealed that the major threat is posed by new entrants & competition amongst existing players due to increase in the size of this market. most of the purchases are impulse in nature and also depends upon the increasing storage requirement. Price. trade fairs/ exhibitions.

Purchase Decision o For both these product categories, wife plays a major role in purchase of the products in these categories. Kids also influence the decision in selecting new trends and designs. o They prefer to buy from well-established brand outlets or chain of showrooms. These products are purchased once in six months with no fixed budget in mind Post Purchase Behavior o For both the product categories, customers look forward for provisions like warranty, replacement of defected products & should be communicated about the same

E.6. Market Attractiveness of Tableware & Plastic Container Industry
Market attractiveness analysis of the above-mentioned four segments has been done based on factors like Industry Growth Stage, Growth of Customer Segments, Growth in Allied Sectors, Competitive Scenario, Potential Entry Barriers Scale of Investments required etc. The findings from this analysis are summarized in the table below: Market Segment Market Attractiveness Main Criteria / Advantages
Demand is huge and it‘s the fastest growing category (more than 20% p.a.); competition is high ;Both domestic & institutional customers purchase products in this category for personal as well as gifting purpose; entry barriers are minimum and customers change products in this category very often; investment required in terms of plant setting & manufacturing cost is less than other categories; margins are low Demand base is increasing with the increase in possession of lifestyle products; few players in the organized market; growing product category (around 20% p.a.) ; both domestic & institutional customers purchase products in this range; Investment required is more than in beverage range category; margins are high Comparatively slow growing category; customer base is limited to institutional customers (Hotel & Catering Industry) & upper middle class segment in domestic customers; investment required is more than other categories; competition is less; margins are high Demand is huge in this segment; competition is high; growth is almost stagnant at 12-15% p.a.; both domestic as well as institutional customers purchase products in this category; investment required is low in this product category; entry barrier is low; margins are low

TablewareBeverage Range



TablewareDinnerware TablewareBarware Range Plastic Storage Container







INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

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Thus, Tableware is the most attractive category and within tableware, a new entrant should focus upon Beverage Range & Dinnerware for entry in the Indian Tableware market.

E.7. Recommendations
India has retained its position as the second-most preferred global location for foreign investment in 2008 and will continue to do so till 2010, lagging only behind China, according to the World Investment Report 2008. Tableware & Plastic Containers imports from other countries are increasing because changing preference of people towards lifestyle goods and desire for more variety. Thus, it is very important for a new entrant to enter this industry with the right entry strategy and targeting most profitable set of customers with positioning of products according to consumer needs Entry Strategy o In order to enter the tableware market in India, the potential investor should enter either through Joint Venture or Merger & Acquisition with the existing player in this industry in India o In order to enter the plastic storage container market in India, the new entrant should enter either through Joint Venture or through strategic alliance with an existing player in that market Positioning o Tableware should be positioned as easy to maintain i.e. unbreakable, scratch free, easy to handle and clean & available in variety of designs & colors across all regions in India o Plastic Storage Container should be positioned as leakage proof, beneficial for storage of all kind of food materials- perishable & imperishable. Target Product Categories o In tableware, beverage range especially tumblers is the most fastest growing category o In plastic storage containers, containers for storage of perishable food items is an important critical success factor for positioning their products

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY

84

Target Customers o For both these categories, women in upper middle class & middle class should be the target segment Distribution o For institutional customers, direct distribution system is the best option for both these product categories o For domestic consumers, multi channel or hybrid distribution network ensures coverage of wider market Brand Building & Promotion o Through proper mix of advertisement in print media, T.V., exhibitions etc. o Introducing schemes like scratch card, discounts etc. on occasions like Diwali for customers & schemes for dealers should also be used to motivate them to sell more

Thus, a new entrant should focus upon Tableware category – beverage range & dinnerware in joint venture or merger & acquisition with an existing player and ensure that the products are available across all geographies and address customer needs in terms of scratch free, unbreakable & maintenance is easy and inexpensive.

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tea and coffee pots. Targeted outsourcing for manufacturers in high-wage countries is very much a part of this strategy and thereby introduces Asian manufacturers into the process. etc. place of origin (imported vs. in particular because optimizing process quality is a challenge that can only be mastered by working together.9. sugar bowls. positioning themselves not only in the up-market segment.2 The Changing Consumers Tableware can be classified in six basic ways: style (formal or casual. the market for ceramic and porcelain tableware is different to that of Europe.1. price segment (high-end. it can be divided into three categories i. or low-end). It is the large market very competitive with high professional importers/ distributors placing large orders. Global Scenario 9. manufactured domestically).1 Global Tableware Industry: 9. sales of tableware have been trending ever lower in the traditional western European markets. glass). drinking glass sets. but also innovations in design. hotels. traditional or contemporary). therefore. dishes. and retail category (the INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 86 . salad bowls.1. stoneware. Technology has to keep pace with these changes. cups and source boats. However. egg cup etc. soup tresses. material (fine china.1 Overview: Tableware is marketed these days as a lifestyle product. USA is one of the biggest market for ceramic and porcelain tableware. The market leaders among the tableware manufacturers are pointing to the fact that it‘s not just technological innovations that count. the western European tableware manufacturers have to pursue clever brand and price policies. Cooperation between the suppliers of machinery and raw materials has become much closer. specialty stores. mass merchants. Ceramic and porcelain table ware are used by household. restaurants. And they prefer to spend their precious disposable income on leisure products rather than fine china. tea and breakfast sets. 9. In addition. barracks. distribution channel (department stores. In the last ten years. and these table ware mainly comprise of coffee-tea sets. Dinner sets. plates.e. End consumers now want a more personalized service in all areas.). mid-range. According to the use of tableware in USA.

mix-friendly stories in open-stock. less expensive range of tableware over the next few years. This color trend is expected to continue into the millennium. dinnerware market. Wedgwood is trying to address this trend as well by introducing a casual. Even so-called formal crystal stemware is being used in casual ways by the consumer. the global tableware industry has faced changes in purchasing habits of consumer products. major companies like Noritake and Lenox have developed more casual lines of crystal or have repositioned their formal stemware at lower prices. with some restaurant chains using "warm" tableware patterns. The growth of casualware has increased the market for specialty glassware (such as sugar containers and creamers)."upstairs" china/crystal/silver department vs. and the introduction of open-stocked casual lines. the "downstairs" house wares department). steady demands for formal ware continues. Some tabletop manufacturers have responded with comprehensive. This casual trend has even extended to the foodservice industry. lifestyles and attitudes toward the home. Formal companies have thus explored a more proactive. In response. Such colors as Spanish green and Mediterranean blue have emerged as everyday basics in glassware. plus accessories in the same or alternative materials. Consumers have turned toward a more casual lifestyle around the world. Since many consumers now consider tableware a replaceable fashion product. The interest in embossed and textured looks in glassware also continues to grow. The casual trend has also resulted in a demand for brightly colored glassware. Decorated glassware has also become more popular. manufacturers and retailers are aggressively designing new patterns to keep with this trend. two-pronged marketing approach: open-stock availability of their traditional lines. While casual tableware patterns are popular. which is something between casual and formal. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 87 .S. The house wares mass market dominates the U. comprised of several coordinating patterns. especially fruit and flower decorations with gold accents. while the market for stemware and barware remains flat. In recent years.These trends are leading to a new style defined as transitional.

Out of this. Commodity plastics contribute US $ 90 billion that is 5.2. overall population growth. five HPL supported FIBC units exported 7 KTA worth goods annually. These three regions form the major polymer production regions of the world.The estimated demand from the US alone (for plastic food containers) has been estimated to touch as much as $21 billion by 2009. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 88 . the firm predicts. a good global economic climate and ongoing substitution processes in favor of plastic have combined to foster steady expansion in the sector. For many years now. the global capacity for polymer production is around 170 MMTA and is growing at a rate of 10. Currently. Plastic has occupied a major role in the lifestyle of the 21st century. Plastic Industry The global plastics industry is marked by dynamic growth with both quantity and quality aspects helping boost the upswing. This gives us an idea of the size plastic industry and the significance that it holds in the global scenario. There are tremendous capacity expansions that are happening for polymers all over the world.2.6 percent of the entire chemical output and polyolefin output is US $ 61 billion that is 3. This becomes even more significant when the global polymer industry is growing by almost twice the rate of the global GDP. Western Europe contributes to around 21 percent of the entire capacity. The global demand for polymers is 139. The demand for the major polymers is growing at a rate of 5. At present.2 percent annually and polyolefin alone make up for the 63 percent of the entire polymer industry.6 percent per year.9. The demand for Polyolefin is growing at an even faster rate of 5.04 MMTA.3 MMTA out of which polyolefin form 89. Global Plastic Products Industry 9. 9.5 percent per annum.2 Plastic containers Plastic bottles accounted for 77 per cent of plastic container weight in 2003 and will continue to remain the dominant type for during this decade. more than 35 percent of the capacity is in Asia – pacific region and around 28 percent of the capacity is in the North America. Based on Frost & Sullivan‘s Report -2003.2.8 percent of the chemical output.1.

Art d‘Inox as well as multinationals like Corelle.10. RAK Glass. there are both domestic players like La Opala RG Ltd. who are a part of this large chunk of market size. Magppie.1.4 Billion including domestic manufacturers & brands imported from abroad which are sold through organized retail channels. the organized market is growing at a much faster rate than the unorganized market. Bharat Bone China Ltd. Graph: Percentage share of the organized and unorganized tableware market in terms of value The organized market is 8% of the total tableware market in India i. Overview . Tableware Industry 10.1. around INR 2.2. The organized and unorganized market has a huge difference in terms of value but with the rising disposable income of middle class & upper middle class as well as growth in hospitality industry. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 89 ..1. *The Financial Express – June 2007 10.The tableware market in India is estimated to be around *INR 30 Billion in 2007 including the unorganized market. Luminarc etc. Industry Segmentation The tableware market is classified according to their application & raw material being used for their manufacturing.1. Tableware & Plastic storage containers Industry in India 10.e.. In the organized market.

e. the tableware is broadly classified as: Tableware Market Dinnerware Beverage Barware Within each product categories. jugs etc. lemon sets. etc. dinner set. Segmentation Based on application Based on their application.1. Around 62% of the total organized tableware market (INR 2. wine sets. saucer. trays etc.4 Billion) comprises of Dinner ware i. This is the fastest growing category in tableware especially among glassware. This category is growing after beverage range because of the growth in hospitality industry. Rs. pudding set. cups. fruit bowls. cocktail shakers. The growth in this category is fast with the changing lifestyle & increasing income of people.1. Category wise market share for organized tableware 38% Dining ware Beverage & Bar ware 62% INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 90 .5 Billion. Barware range – This includes ice buckets. 1.2.   Beverage range – This includes glasses. the products are:  Dinnerware range – This includes plates (quarter / full). cutlery. salad bowls.10.

2.Based on the responses of a senior manager in the organized steel tableware with matte finish .1. market size of each category in India based on the material used can be predicted.Based on the responses of senior managers in the organized glassware & opal ware -Based on the responses of a senior manager in the organized ceramic tableware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 91 . Major kinds of material which are used for the manufacturing of Tableware are: Tableware Market Stainless Steel Without Matte finish With Matte finish Ceramic Bone China Glass Transparent Glassware Opal ware Porcelain The market for tableware is dominated by a large number of unorganized players for stainless steel tableware.2. Based on the responses of players in the organized tableware market. Hence. it is difficult to predict the share of stainless steel tableware in the total table ware market. Segmentation Based on Raw Material The material used for their manufacturing may differ from manufacturer to manufacturer.15 billion in the overall tableware market  Total market for opal ware is INR 6 billion in the overall tableware market .10. Stainless Steel  Glassware  Ceramic  The total market for stainless steel tableware with matte finish is INR 400 million in the organized tableware market The total market for glassware is INR 12 billion in overall tableware market The total market for ceramic tableware with is INR 2.

1. the customers can be classified in two groups. namely:   Domestic customers – for personal usage / gifting Institutional customers o Corporate customers – for gifting & as freebies o Hotel / Catering & Restaurant customers – for business usage Amongst the Institutional customers. can be used in microwave as well as for serving and are used by most of the domestic as well as institutional players.4 Billion INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 92 . Institutional customers for Tableware 44% Domestic customers Institutional Customers 56% Graph: Percentage share of the tableware market in terms of customer base in organized tableware market of INR 2. opal ware which is unbreakable in nature is preferred by most of the consumers for domestic purposes as well in hotels / catering.000 tones per annum.3. Ceramic ware comprising of crockery and tableware is produced both in organized and unorganized sectors. There are 16 units in the organized sector in India with a total installed capacity of 43.Glassware has the largest market size in terms of value in the Indian tableware market. Customer classification According to the usage of tableware. Domestic customers Vs. Also. 10. the corporate customers include a majority of Pharmaceutical companies. exports also form a major proportion of the total sales for all the manufacturers. Bone China crockery ware is being imported from Bangladesh and Sri Lanka in view of the better availability of raw material there. Apart from these two categories. This is because glass wares are available in variety of designs.

10. the tableware industry in the organized segment is growing at the rate of 15-20% on an average taking into consideration the effect of slowdown. in Opal ware Yera in Glass ware Bharat Pottery Ltd. Growth Drivers for Tableware Industry Increasing per capita income Impact of growth in organized retail Increasing middle class population Key Growth Drivers Ownership of luxury products Openness to Trade Increasing Hotel & catering industry INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 93 .1. The fastest growing category is beverage range.Presently.5. where tumblers are the most fast selling items. Thus. in ceramics & stone ware Art d‘inox in steel with matte finish Magppie in steel with matte finish 10.1. there is a huge market for new players to enter this industry through proper marketing & sales network. Major manufacturers in India The major domestic manufacturers in India for Tableware according to the material used for manufacturing are:      La Opala RG Ltd.4.

1 billion)—11 times the level of today and 58 percent of total Indian income**  Increase in the ownership of luxury products. Government of India.T. and is expected to reach INR 826.76 billion by 2010 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 94 . according to KSA Technopak  Increase in Hotel & Catering industry o There are some 1.980 hotels approved and classified by the Ministry of Tourism.a. which really adds to excessive expenditure*  Increase in the number of middle class & upper middle class o The middle class currently numbers some 50 million people.5 trillion rupees ($1. with a total capacity of about 110.000 hotel rooms o The hospitality industry is poised to grow at around 25-30% p..a. but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population** o These households will see their incomes balloon to 51. Real Estate industry which leads to increase in expenditure o Planned expenses are to increase by 47 per cent and non-planned expenses increased by (about) 6 per cent. Increase in per capita income with the growth in I. ITES. o The current market size of luxury-very premium goods and services is INR 840 Billion which is rising at 16% p.

But tableware is a need based category and with the increasing disposable income and growth in hospitality industry. it would certainly affect the demand in this industry. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 95 . after considering the drivers for the growth in Tableware Industry. has become a very popular concept in urban India  Openness to trade. channelization of investment and deregulation in India would promote imports /exports with other countries *The Times of India: Advantage India. the demand for this category will not be affected much for the organized players.Growing Young Population (March 2007) ** Business Week – May 19 2007: Next Big Spender‟s – India‟s Middle Class Thus. with family members and friends. it is expected that it would grow at the rate of 15-20% for next five years. However.o Dining in restaurants on weekends and other holidays. due to the economic recession in recent times.

Joint venture of Versace with Rosenthal and several other players in the lifestyle brands are targeting the upper middle class after looking at the rising opportunities in this segment Intensity  High Medium Low INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 96 . Competitive Rivalry Industry shifting from highly unorganized towards organized sector. with the increasing competition in organized market. 1. Analysis of Tableware Industry in India The tableware industry is highly disorganized in India. Bargaining power of Customers With fast growing middle class and changing lifestyle.1. there are few major players who are a part of the organized tableware along with importers who are selling brands from abroad by establishing their sales & distribution network in India.6. Competition is increasing because of the entry of new players & joint ventures with the existing players. Also. however steel prices are increasing which has increased the bargaining power of suppliers of steel tableware 3. Threat of Substitute Products The organized market as well cheaper products being imported from countries like China are a major threat to the products manufactured in India or abroad. imports have become cheaper 4. In addition. huge demand is there.10. However. Also. stainless steel utensils sold in unorganized market & melamine tableware which are cheaper are substitutes in this category 5. However. In addition. people want change and get bored of their old tableware after some time. Bargaining power of Suppliers 2. Threat of new entrants Several new players & importers are coming in this market. due to FTA between India & several countries. several players are coming in the lifestyle products category in Joint venture with established brands in India. Also. bargaining power of customers is increasing Raw material is available in abundance in India & is also imported from abroad like Bone Ash.

Thus. But with the increase in the number of new entrants. 2. 4. Competition amongst existing players – The players in the organized market are targeting the same set of customers in the domestic consumer‘s i. products in this category are imported from several countries which would increase with the increase in demand in future. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 97 . Thus.1. the threat posed by substitute products is medium in this product category. the stainless steel utensils can be manufactured at a lower price than glassware or ceramic ware. this is an attractive segment to focus upon in household segment as well amongst the lifestyle goods. Thus. the threat posed by existing competition is medium because of the difference in the raw material being used for manufacturing these products. the threat posed by new entrants is high. Thus. Bargaining power of suppliers – Raw material for the manufacture of ceramic ware and unbreakable glass ware is imported from outside India from cheaper sources. Threat from new entrants . the bargaining power of suppliers is low for these material categories except in the case of steel ware because of the high bargaining power of steel suppliers in India. Bargaining power of customers – Customers have a limited choice base in the organized market at present. Thus. middle class & upper middle class. in order to capture a significant market share in this category. Also.With the increasing size of middle class & increasing disposable income. brand proposition. Substitute products – Due to large base of unorganized market & economies of scale. 5. they can be used as a substitute for these product categories which are expensive. several new players are coming with the existing players diversifying their product portfolio. their bargaining power is also increasing with the increase in awareness level.e. But this bargaining power is limited by the product & quality attributes i. 3. Thus.e.

Critical Success Factors for Tableware Industry A well connected distribution network Targeting domestic as well as institutional customers Focus on easy to handle & low maintenance tableware CSF Creating a Brand Image Knowledge of needs & expectations of target customers Proper marketing activities in various media Based on the above-mentioned critical success factors.7. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 98 . it is very important for a new entrant that they have good distribution network with wide coverage and with minimum number of intermediaries to save on cost. creating the brand image in the minds of consumer in the Indian market is very important for a new entrant by proper positioning of their products based on the strategy being followed by them. They need to adopt various marketing initiatives to promote their brand and sell their products through various channels rather than just one source.1. In addition.10.

molded luggage. Writing instruments and travel ware are other promising segments having a potential to generate export revenues.10. Toys. Consumption of plastics will be touching 4 million tons per annum in almost 2 years and is growing at a rate of 14 percent per annum. At present.1 Overview Based on Frost & Sullivan‘s Report on ‗A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products‘ in 2003. Writing instruments.3 Growth Rates 10 25 20 15 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 99 . The plastic industry has been witnessing tremendous growth due to the widening of its application spectrum and penetration of new generation polymers in all the key sectors of Indian economy. Consumer goods include Household ware.0 13.2. Table ware & Household products Total Source: Frost & Sullivan . The total imports of household articles. molded furniture.6 14. and personal care products. personal care products. and kitchen ware by US totaled $ 1000 million in 2002. Almost 50 percent of the plastic manufacturers have some operations in this particular category. and the respective growth rates for 2002 Categories Molded Luggage Molded Furniture Writing instruments Kitchenware. there are 25. revenues.7 49. household ware and kitchen ware is the largest segment both in terms of domestic demand and the export potential from India. Given below is the break up of the following consumer goods in polymer consumption. Plastic is one of the fastest growing industry segments in India. gift articles and novelties. tailoring materials. Within this market. etc. Kitchen ware. Plastic Containers Industry in India 10.0 9. Consumer plastic goods account for approximately 15 % of the market.000 plastic processing units in the country.2003 KTA 150 140 40 190 520 Size in revenues in Billions 12.2. The Indian plastic processing industry possesses strong capacities and capabilities in these segments.000 to 30.

Indian plastic container industry comprises of a large number of unorganized players and few organized players who dominate with major market share in this industry. air-tight and aesthetically appealing. The changing lifestyle and increasing disposable income is enabling people spend on products in this category which are either branded or imported and are also good in quality attributes. With changing preference of people for using plastic containers for storage purpose is promoting the growth of this industry. They want quality products which are leakage proof. Unorganized tableware market in India 42% Organized 58% Unorganized *Based on the responses of a senior manager of an organized player in plastic container market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 100 . Organized Vs. The industry is divided into organized & unorganized players with organized player capturing 58% of the total market size of Consumer Plastic goods. The plastic products industry comprises of storage boxes & thermoware containers.

used for stocking dry food items like pulses etc. juices etc. Dine ware – This includes bowls.  Food Preparation boxes – They can be used for preparing food items like shakes. jugs. For e. Mugs STORAGE BOXES used in kitchen. vegetables. salads.These are large sized boxes. bottles.  Microwavable boxes – They can be used for heating and cooking food items in microwave. hot pots. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 101 .2 Industry Segmentation The plastic product market is classified as: Plastic Container Storage Boxes    Thermoware Dine ware Storage boxes – This includes boxes for dry food items as well as cooked or uncooked perishable food items Thermoware – This includes lunch boxes. flasks. water storage jugs etc. Pulses. storage and serving purposes. which are perishable in nature. mixing bowls etc.  Storage Canisters..2. Rice. Wheat. They are multipurpose boxes and hence used for cooking. jugs. based on their application and benefits offered are classified as:  Dry Storage boxes – They are used primarily for the storage of food items which can be kept for a longer duration of time.  Refrigerator & freezer boxes – These are air tight & liquid tight boxes. Dry Fruits etc.10.g. which are primarily used for storage of fruits.

The level of imports for these storage boxes used in kitchen is increasing at a fast pace. exports also form a major proportion of the total sales for all the manufacturers 10.2. Ltd.2. Major manufacturers in India The major domestic manufacturers in India for Plastic containers are:      Cello Hamilton Housewares Pvt. it is during the last 1. The plastic container industry is growing at the rate of 12-15% with the increasing storage requirement of people and more aesthetically appealing containers rather than stainless steel containers.1. Also. they are already importing plastic storage containers from Thailand for last 4-5 years. 10.4. the branded plastic containers can be used for gifting purpose as well as for corporate gifting / freebies for product promotion. However. Customer classification According to the usage of tableware. As per the views expressed by a retail giant in household product category in India.5 years that the volume of import has grown from Thailand within the plastic container category. the customers can be classified in two groups. Tupperware Pearl Pet Eagle Thermoware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 102 .3. namely:   Domestic customers – for storage purpose / gifting Institutional customers o Corporate customers – for gifting o Hotel / Catering & Restaurant customers – for business usage and for promoting their products by offering plastic containers as freebies Apart from these two categories.

5.2.10. Growth Drivers for Plastic storage containers Industry Openness to Trade Increasing disposable income & middle class Impact of organized retail Key Growth Drivers Increasing pattern of corporate gifting/ freebies Plastic replacing steel due to rising modular kitchen concepts Increasing storage requirements with increase in working women INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 103 .

competition is increasing 4. People tend to prefer branded products and hence the bargaining power is low due to less number of players in organized market Raw material is available easily in India & is also imported from abroad like Polycarbonate. Polyurethane are available at lower price in Asian countries than in other European countries 3. Threat of new entrants Several new players & importers are coming in this market.2. Also. Bargaining power of Customers With fast growing middle class. Several players are also importing plastic containers from other countries with increasing demand & better quality offered.10. new entrants find this market very attractive Intensity  High Medium Low 1. Threat from new entrants .With the increasing size of middle class and increase in number of working women. 1. Bargaining power of Suppliers 2. Increasing organized retail is also supporting the growth of this industry. Thus. the threat posed by new entrants is high. people prefer steel containers for storage than plastic because plastic is considered unsafe. products in this category are imported from several countries which would increase with the increase in demand in future. The new entrant should offer products which are good in quality and comparable in price offered by existing players. Also.6. 5. With increasing middle class & working women. Threat of Substitute Products The unorganized market offers cheap substitutes in this category. Analysis of Plastic storage containers market in India The plastic container market is highly disorganized in India although the majority of market share is possessed by organized players. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 104 . increasing working women and changing lifestyle. this is an attractive segment to focus upon in household goods. huge demand is there. Competitive Rivalry The number of players in the organized market is less but with increase in imports due to FTA agreement with several countries.

2. 5. Polyurethane are available at cheaper price in Asian countries. Thus. good aesthetic appeal. Polycarbonate. Hence. 4. the threat posed by these substitute products is moderate because of the increasing preference of people for branded & good quality products. air-tight. Substitute products – Due to large number of unorganized players in the plastic product category. they imitate these products and offer them at much lower cost due to usage of low quality plastic.e. Bargaining power of suppliers – Raw material for the manufacture of plastic containers i. quality is important for the target customers who are willing to shell out money for the product attributes like leakage proof. Hence. Thus. the threat posed by bargaining power of suppliers is low in this product category. 3. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 105 . Competition amongst existing players – The existing players are posing threat to the new entrants due to established brand name and trust in the minds of customers. Bargaining power of customers – Bargaining power of customers is low in organized market because of the good quality plastic being used for the manufacturing of storage boxes which allows them to spend. the intensity of threat posed by them is high in this product category.

INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 106 . Indian products find it difficult to compete in the price-sensitive markets. both at the domestic and the export level. Export markets are tapped by very few players because of non-availability of resources in terms of representations in the foreign markets as well as capacities.7. which will be good for the future prospects of the industry The amount of investment required to start the business in this segment is low Weaknesses    The industry is dominated by a few players in terms of revenues as well as number of goods produced.  Most of the companies are privately owned entities and are lacking in managerial aspects. which can help to boost the production in the future Many players in the medium scale industry are also selling branded products.2. Imports from the Chinese manufacturers are hampering the growth of the industry.10. Strengths and the weaknesses of the industry Strengths    There are access capacities available in the market.

They should have a large presence across all the regions in India.2. They should have a trained sales team to promote their products rather than spending much on advertising. air tight & aesthetically appealing‖ products Targeting domestic as well as institutional customers for freebies CSF Creating a Brand Image Knowledge of needs & expectations of target customers Trained sales team to create awareness amongst customers Based on the above-mentioned critical success factors.10. it is very important for a new entrant that their products are different from the ones offered by existing players. Also. they should create a brand image in the minds of consumer about the benefits being offered by their products over other similar products. They should target working women for this product category. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 107 . Critical Success Factors for Plastic storage containers A well-connected distribution network Focus on ―Leakage proof.8.

In both these categories. there are players like Shubhda Impex. Imports structure in Indian Tableware & Plastic containers market 11. the major players which are importing consist of Lock n Lock. RAK Porcelain etc. For products that do not fall in the FTA. Overview In case of tableware category.2 Current Import Duty Structure Players importing products in India from other countries. They are importing brands like Luminarc. they have to pay custom duty for importing the tableware & plastic products (containers & storage boxes) from abroad. Paris. Tupperware etc.. In order to import products in this category importers have to pay import duty 11. total duty paid by importer is 30% (Basic Duty + Additional Duty + Educational Cess) of the purchase price.3.1. Sri Lanka. the duty paid is half of what is paid in case of imports from other countries. Major brands being imported in Indian tableware market        Corelle in Opal ware Milton Treo in glassware & opal ware RAK Porcelain in ceramics & porcelain Luminarc in opal ware Noritake in ceramics & porcelain Crysal D‘Arques Paris Other Chinese brands INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 108 . state local taxes are charged at 12 % based on the states where it‘s sold. who are importing products in tableware category. Apart from custom duty.11. are not facing any barriers at present. RAK Glass etc. total custom duty can be as high as 50 % of purchase price. Crystal D‘Arques. 11. Thailand and many others. In case of SAARC countries like Pakistan. In case of plastic containers & storage boxes. Iran. either single brand or multiple brands from several countries like China. World Kitchen. Corelle. Sri Lanka.

Manufacturers in plastic products category like Cello & Hamilton. import products from Italy. their channel structure may differ in terms of distribution of the products in this category. 11. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 109 . This helps the foreign manufacturers to utilize the patent/ trademark of Indian manufacturers and can sell their products in Indian market to the same target customers. Thailand. Channel Structure for Importers The channel structure for manufacturers importing tableware & plastic containers from other countries is: Multi brand outlets Exporter Manufacturers Distributors Own Stores es Dealers (in some cases) Retailers / Customers In case of manufacturers in tableware category. through licensing agreement with Indian manufacturers. China etc. & sell them under their own brand like Milton sells glass ware imported from other countries with the brand name ‗Milton Treo‘. Players like Cello have tie-ups with Italian brands like ENJOY manufacturing the products in India under Cello‘s brand name through licensing agreement. similar items can be co-branded and sold.11. however. Major brands being imported in Indian Plastic containers market   Lock n Lock Tupperware These brands are imported by both Indian manufacturers as well as importers (in organized market). Manufacturers & importers follow the same import procedures. they might also import products from countries like Europe. In addition.5.4. The advantage for this kind of model is that the well-established players in Indian market can use their sales & distribution market for similar product categories imported from other countries.

for products which are imported. some of the organized players in both the categories who have set up their offices in India for distribution of the brands manufactured abroad like World Kitchen sells Corelle. it is important that either they are sold through a licensing agreement with an established player in the market in that country or through exclusive distributors of their products being imported. However. However. The advantage of selling products through exclusive importers is that they would focus on establishing the brand name & selling the same through their distribution channel. the margins are very high. in case of importers who are importing multiple brands. RAK Porcelain. sourcing price for importers are around 60% . they may promote those brands / products which they think is more profitable to them or the margins are high. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 110 . Thus.80% less than the selling price varying from high volume to high value items. However. Arc International sells Luminarc. Noritake. they have a limited presence due to lack of proper infrastructure in terms of distributing these products across the country. Lock n Lock etc. In case of tableware. The super distributors may be multi brand distributors or exclusive distributors as in the case of Noritake.The channel structure for importers in tableware & plastic containers (both organized & unorganized players) in India who sell products with the same brand name as they are sold in their own country is: Retailer Imports Importers / Super Distributor Customer Distributor / Dealer Retailers The major importers in India are unorganized players. Thus.

Another plant has already started functioning in Uttaranchal with imported equipments being used for manufacturing the new brand called ‗DIVA‘ in which the material used is almost unbreakable. Sushil Jhunjhunwala and Ajit Jhunjhunwala. it is very important for manufacturers to maintain the availability across the country. La Opala‘s core strategy is cost leadership i. a group company manufacturing plain Opalware. casseroles and the like. Art d‘inox.La Opala RG Ltd. bowls. It started manufacturing crystal ware in March 1996 sourcing the exclusive right to use the technical know-how. from Doosan Glass of South Korea. world class quality.1. Value Chain of Tableware Industry The products being manufactured in India in tableware category include dinnerware. The major manufacturers in these categories are La Opala. beverage & barware.1. The new unit avails an exemption of excise duty and income tax for 10 and 5 years respectively. About the company . information. In order to achieve this. Bihar.e. their value chain should be designed in such a manner that. plates. data for the manufacture and sale of crystal ware (Brand name: Solitaire) in India and abroad. Discussed below is the value chain of one of the leading tableware industry player. They also import bake ware from abroad. La Opala has an USP of elegant designs. Inbound Logistics & Operations . they would save on cost at each level of value chain. microwave safe. Understanding the Value Chain 12. and is involved in the business of manufacturing Opalware and Crystal ware products. by focusing on those activities in the value chain to squeeze out the cost from value – adding activities. chip resistant and 100% recyclable mark.1. thus. It has a range of 100 products including tea cups. With the increasing demand of products in these categories. provide them at competitive price. (LORL).Case study for Tableware: Value chain of La Opala RG Ltd.12. a leading manufacturer of crystal ware globally. mugs.The company made a diversification in the field of glass tableware by producing (24% lead oxide) lead crystal ware at Madhupur. In the year 1999 the company merged with itself Radha Glass. Yera etc. 12. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 111 . Magppie. decreasing their cost of manufacturing to pass on the benefits to customers. promoted by Mr.

Thermoware & Dine ware. manufactured in India in plastic container category. The major manufacturers in these categories are Hamilton Housewares Pvt. They are promoting their products through distributor. They introduce several consumer schemes like scratch card system & festive discounts. Value Chain of Plastic Containers Industry The products. Eagle Thermoware etc.Outbound Logistics – La Opala has a well-established distribution network across the country to make their products available all across the country. Cello. They have tie ups with several multi brand outlets like Shoppers Stop. La Opala has a total of 85*** distributors across the country with 25 distributors in North. Services – They tend to provide new varieties at economical cost to the customers like unbreakable material being used to manufacture tableware. Ltd. Marketing & Sales – They are targeting masses between the age group of 21-35 years*** of age and among the institutional players. they target Pharmaceutical companies and Four & Five Star hotels. Their distribution network is as shown below: Own Stores Factory es Multi brand outlets / Institutional sales Raw Material Sourcing Distributor Dealer / Retailer Customer * Although La Opala does not has its own stores.2. Westside etc. *** Based on the responses of a Senior Manager at La Opala 12. The main outlets currently include departmental stores. include Storage Containers. through advertisements in print media and are planning to come on TV. 25 in West. some of the manufacturers do. For example Magppie has its own stores. Tupperware. general utensils merchant and gift retailers. 15 in South & 20 in East India.. With the increasing demand of INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 112 .

Rathod.1.A.Germany. at a small factory in Goregaon.E. developed the Unique Breakthrough Insulation technology THERMI-GUARD Many product designs PATENTED in Europe They have warehouse and sales offices in different locations in India. with just 60 workers and 7 machines engaged in the manufacture of the finest range of Casserole. Pankaj Rathod.S. Deputy Managing Director. WIMPLAST -Italy & SUMMITOMO – Japan Strong in house R&D base. as they were later positioned. Managing Director and Mr. that the Indian market had ever seen     Mr. having wide range of plastic moulded products Annual sales turn over of more than USD 100 million and exports of USD 28 million 2100 employees. Chairman. U. spearheaded the growth & diversification into new products and markets First & Largest Manufacturer of Branded household products in India. Kenya & U.Founded by Mr. Pardeep Rathod. Discussed below is the value chain of one of the leading tableware industry player. Investment of more than USD 50 million in ultramodern plastic processing machines from BATTENFIELD. Bombay. Nepal. 12.2.more than 300 engineers and plastic technologists Inbound Logistics & Operations      They have increased production capacity by 1 million & are continuously adding on to their capacities of production every year of 10 % -15 %.D. G. 1986. Sri Lanka. . About the Company  Cello Thermoware ltd. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 113 . or Hot Pots. value chain of manufacturers should be such that products are available across all geographies. Case study for Plastic containers: Value chain of Cello Thermoware Ltd. in May 10.Plastic containers.A.

those dealers who achieve higher sales target. U.S. Italy. Services –  Availability is a major concern in this business.e. Regularly export to more than 60 countries including U. They are planning to increase the number of distributors by 100 in next 1-2 years Multi brand outlets / Institutional sales Factory Raw Material Sourcing Distributor Dealer / Retailer Customer Sales & Marketing –    Dealer oriented activities are incorporated i. Japan etc Outbound Logistics –     They sell it through distributor network who then sell it to the retailer For organized retailers. Cello ensures that their products are available across all cities through a well connected distribution network INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 114 . Germany..K. summer season etc. receive more benefits in terms of the revenue Direct selling team is in place for corporate sales They also incorporate schemes for customers in festival seasons like Diwali. they directly sell through the factory They have 90 exclusive distributors in this product category throughout India. Thus..A.

25-32 years. Delhi „ I would purchase tableware when the need arises and for change‟ – Working . Daughter‘s wedding etc. FGD findings for these two product categories are presented below: 13. Consumer Insights 13. Kolkata INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 115 . they may also purchase tableware if they can exchange their old tableware with new ones or some festive offers are going on (discounts).e. SEC A2/B1 . Bangalore „ I would buy tableware in festive season or for show off. 25-32 years . birthday parties For changing old tableware with new ones With increasing requirements of family members For gifting on occasions like Diwali. Also. for any player entering the tableware & plastic containers industry.2. Tableware – With the changing lifestyle & customer preferences. Anniversary.1.Thus. FGDs conducted across the country covered the consumer insights for four product categories inclusive of plastic products and utensils as well. At the Problem Recognition / Need Awareness Stage – As discussed above. Cost Leadership or Differentiator. SEC A1/A2.Working . SEC A2/B1 . Customer Purchase process 1. When the items break. 38-45 years .kitty parties & when many people are coming at a time‟. Overview As mentioned earlier.Housewives‟. it is very important to effectively utilize all the activities in the value chain based on the strategy they want to follow i. they may purchase products in this category just because they like something while visiting a store (Impulse Purchase)    „I would buy tableware at occasions like birth day parties . then they need to replace them with a new set Other than the above mentioned reasons. Their value chain should be organized in such a way that each activity aligns with the strategy they want to incorporate in the Indian market 13. in this stage the consumer recognizes the need for purchasing a particular product. the major reasons when consumers find that they need to buy Tableware were observed as:      For occasions like Kitty parties.

containers) are purchased whenever they need to store food items – perishable / imperishable. even if there is no need at present (impulse purchase which refers to buying decision made immediately. Hyderabad „ I would purchase plastic products when the need arises and for change‟ – Working . their purchase would depend upon the kind of item to be stored like for perishable items. they should be moisture proof. Information Sources – The major sources of information for products in this category are:   Word Of Mouth – after hearing about the quality of products from friends/ family. they may purchase them for changing the old boxes with new ones & for gifting on occasions like Diwali etc. people prefer to purchase plastic products which are aesthetically appealing and keep the food items fresh. Also. 25-32 years . they might purchase these items. But they can also be purchase anytime you find them. the customer doesn‘t spend much time in searching information about such products because they are not very high value items and are purchased whenever the need arises or even if there is no need. Kolkata 2.Plastic Products – Although products in this category (storage boxes. Information Search – In case of tableware & plastic products. SEC A2/ B1. people in Southern India prefer to store food items in stainless steel containers rather than plastic boxes. 25-32 years. Also. With the difference in the storage of food items. SEC A1/A2. With the modular kitchen concept coming in place. since they are not very high value items. For microwave. the purchase of plastic containers is increasing for carrying food items. With the increase in number of working women. in an unplanned manner based on urge created by liking a product very much).   „ There are no specific occasion or any function for purchase of these items because plastic items are useful always‟. consumers tend to purchase those products Print Media ( Newspapers & magazines) – customers tend to refer these sources to know about different brands in the market & schemes/discounts going on in the market at any point of time INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 116 .Working women. most people prefer to use glass containers and not plastic containers across majority of the regions.

Usually customers have no fixed budget for this category of products.It should be able to reflect social status i. They should not loose color. 25-32 years. they would not mind paying extra price for that       Brand. Bangalore 3. Ahmedabad „While purchasing tableware. touch & feel about the quality of products as well as the price range suitable for them  Trade fairs & exhibitions. handling of the product should be easy.It should look good & available in various shapes & designs. 38-45 years. Retail stores – Most of the multi brand outlets display products of different brands. Finish of the product should be good Maintenance – It should be easy to handle and can be cleaned easily „For purchase of tableware . we see that handling & cleaning of products should be easy‟-Working .we see the brand we are purchasing should be trustworthy‟.we see them before purchasing the same as displayed in stores or if someone has given reference or told about the quality of products‟ .Working .Housewives.  Price – This is considered less important in comparison to quality. So even if it‘s expensive but satisfies them on quality & social status front. Parameters identified as important to consumers while buying Tableware are as follows:  Quality – In this parameter.Most of the imported products are displayed in these exhibitions & customers visiting these places tend to purchase them if they like the products being displayed  „For purchase of tableware . preferably they should be unbreakable. SEC A2/B1 . Evaluation of Alternatives – This stage involves weighing different product attributes and their ability to deliver benefits based on the information collected in the previous stage & based on the requirements of customers. luxury products. from where customers can see. SEC A1. SEC A2/B1. 38-45 years. should be light in weight. several sub-aspects are present. Variety – It should be available in variety of colors & designs.e. Aesthetic appeal. It should be trustworthy. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 117 .

SEC A1/A2. This includes that the plastic should be of good quality. we are the Decision maker. Lid should be comfortable & durable. Delhi „Brand is an important criterion in the purchase of plastic ware like Tupperware‟. But people also face barriers in the purchase of branded plastic ware because they are expensive and can be purchased only through agents like Tupperware i. It should be air tight & leak proof in order to store food items in them. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 118 . 3845 years. 25-32 years. Kolkata „We see that after washing the color should not fade or disfigure & it should not start looking old‟Housewives. we see that it should be air tight & food has to be preserved well.e. Brand is also considered as an important parameter in the purchase of products in this category for upper middle class & higher class people.    „For purchase of tableware . Husband only takes care of financial part. „For purchase of tableware& plastic products. food items kept inside should not smell & the taste of food should not change. & should be odor less‟.In case of Plastic products the major parameters are quality & functionality of the container. They should look good & after washing the color should not fade or it should not get disfigured. Although there is no fixed budget kept for the purchase of these products. they are admirers‟.Working. SEC A1. Key decision maker in case of both tableware & plastic products are women. Mumbai 4. SEC A2/ B1. It should be hygienic & should be multi-purpose in nature i. it can be kept in fridge & microwave. in selecting any product children might influence the decision in terms of design & looks of the product. But it is not as important as quality of the products.Working. but price does mater to customers.Working . Bangalore The frequency of purchase of products in these categories is almost once in every six month. It should be long lasting. 25-32 years. they are not freely available in open market. They should be available in various sizes. However. Purchase Decision – This involves decision related to what to purchase & from where to purchase & who will purchase. Men are only involved in the financial decision making or in accompanying women while making a purchase. 38-45 years.e. SEC A2/B1.

Point of Purchase- In order to purchase these items, customers prefer multi brand outlets like Pantaloons, Shopper‘s Stop, Big Bazaar etc. where they can see, touch & feel these items & can compare with other brands as well in terms of functionality as well as prices. Also, they find variety in terms of colors & designs under one roof in these stores and they can go their any time along with their family. They prefer exhibitions as well to purchase these products, but the major problem, which they face in these exhibitions, is that no exchange is possible in these exhibitions as they are temporary in nature, which is not the case in case of multi brand outlets or shopping malls.
„For purchase of tableware & plastic products, we purchase from malls, exhibitions & Home furnishing stores‟Working, SECA1, 38-45 years, Mumbai

5. Post Purchase Evaluation – In these product categories, customers expect that there should be an exchange mechanism if the product is defected and some kind of guarantee / warrantee schemes should be provided based on the kind of product they are purchasing. Also, customers should be made aware of such schemes in advance so as to build trust in their mind.

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Learning from Consumer Insights - Summarized

Tableware – Whenever the need arise, with the increase in number Need Trigger of family members or parties and when they need to replace the old tableware. They may also purchase for gifting on occasions like Diwali or Marriage in the family. Plastic Products – When they need to store food items but mostly Information Sources impulse purchases, sometimes bought for gifting purpose as well. Tableware & Plastic Products – Newspapers, Magazines, Trade Fairs / Exhibitions, Word of Mouth from Family or Friends

Tableware – 1. Quality 2. Price 3. Brand 4. Variety 5. Aesthetic Alternatives Evaluation Plastic products – 1. Quality 2. Functionality 3. Hygienic 4. Variety 5. Aesthetics Tableware & Plastic products – Wife plays a major role in purchase Purchase Decision of the products in these categories. Kids influence for new trends and designs. They prefer to buy from well-established brands or chain of showrooms. Husband can influence in terms of spending or budget. These products are purchased once in six months with no fixed Post Purchase Behavior budget in mind Tableware & Plastic Products – Customers look forward for provisions like warranty, replacement of defected products & should be communicated about the same Appeal 6. Maintenance

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14. Conclusion
14.1. Market Attractiveness
Based on the understanding of Tableware & Plastic Storage Container category, an evaluation in terms of market attractiveness was undertaken to develop a rank order for each of these. This ranking has been done based on the various criteria, such as:       Industry Growth Stage Growth of Customer Segments Growth in Allied Sectors Competitive Scenario Potential Entry Barriers Scale of Investments required etc.

The findings of the above analysis are as follows: Market Attractiveness

Market Segment

Main Criteria / Advantages Demand is huge and it‘s the fastest growing category (more than 20% p.a.); Competition is high ;Both domestic & institutional customers purchase products in this category for

TablewareBeverage Range



personal as well as gifting purpose; Entry barriers are minimum and customers change products in this category very often; Investment required in terms of plant setting & manufacturing cost is less than other categories; Margins are low Demand base is increasing with the increase in possession of

TablewareDinnerware



lifestyle products; Few players in the organized market; Growing product category (around 20% p.a.) ; Both Domestic & Institutional customers purchase products in this range; Investment required is more than in Beverage

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Competition is high. Also. a new entrant should focus upon Beverage Range & Dinnerware in Glass material for entry in the Indian Tableware market. Recommendations Based on the analysis of tableware industry in India.range category. JV has its own pros & cons since it will limit the control over business and dilution of control takes place and the partner may become a competitor. Investment required is more than other categories. following are the key take-outs for potential entrants in Indian Tableware market: 15. the potential investor should enter either through Joint Venture or Merger & Acquisition with the existing player in this industry in India. Margins are low Thus.a. Investment required is low in this product category. Competition is less. Through M & A they may use the established distribution network of the existing player along with inbound and outbound logistics for managing the product availability and delivery to the final customer. Margins are high Comparatively slow growing category. 15. Customer base is TablewareBarware Range  limited to institutional customers (Hotel & Catering Industry) & upper middle class segment in domestic customers. Tableware is the most attractive category and within tableware. Margins are high Demand is huge in this segment. Plastic Storage Container Growth is almost stagnant at 12-15% p.. Entry barrier is low. Both domestic as  well as institutional customers purchase products in this category. these entry mechanisms are less risky in comparison to fully owned INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 122 .1. But the major advantage of these mechanisms is that an investors can use the technology as well as the name of the existing brands in Indian market. Entry Strategy In order to enter the Indian tableware market.

2. In order to enter the Indian plastic container industry it is very important that the products are widely available across all geographies. Also. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 123 . the new entrant should enter either through Joint Venture or through strategic alliance with an existing player in that market. middle class & upper middle class women. easy to handle and clean & available in variety of designs & colors across all regions in India.3. a new entrant should first enter the Indian tableware market with beverage range particularly tumblers in variety of shapes & designs and them they can increase their product portfolio with barware and dinnerware as well when they are able to establish their brand name in the Indian market. they should offer variety in terms of size. they should tie up with the existing player in the Indian market with similar positioning of products in tableware segment to effectively utilize the value chain of that player and pass on the benefits to customers. they can sell their products to the same target customers. beneficial for storage of all kind of food materials. Target Product Categories Based on inputs from industry experts. 15. Positioning of Tableware & Plastic storage containers In order to target the masses i. unbreakable. Thus. In plastic containers for storage purpose. tableware should be positioned as easy to maintain i. Thus. the fastest growing category in tableware is Beverage range followed by Dinnerware. In case of Plastic containers for storage purpose. Also. in order to enter this market in India.e. they should enter the market with products for storage of perishable food items and can be used in both refrigerators & microwaves. they should be positioned in such a manner that they are different from the other products in this category in terms of quality of plastic used. Also. Later.manufacturing facilities where the chances of loss are high. color & utility. scratch free. they can also offer large containers for storage of imperishable items and thermoware as well.e. 15.perishable & imperishable. leakage proof.

However.5. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 124 .. leakage proof and safe. Also. exclusive boutiques. Also. the marketer must be careful with this approach due to the potential for channel conflict. salesperson) is involved in the distribution process.4. Personal Selling Systems should be employed where a person whose main responsibility involves creating and managing sales (e. Distribution In order to sell the products in tableware & plastic storage containers category to institutional customers. there is a need for direct distribution system where there are no other parties involved in the distribution process that take ownership of the product. generally by persuading the buyer to place an order. For beverage and barware. it can be seen that women especially newly wed in upper middle class & middle class should be target segment for a new entrant as the middle class currently numbers some 50 million people. there is a considerable increase in the disposable income and people are purchasing more number of lifestyle goods because of the rising income levels. 15. Multi channel or hybrid distribution network should be used where a marketer is following a multi-channel or hybrid distribution system. but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population. the target customers are domestic users who use these products for their personal usage or for gifting. They can also target companies & hotels due to the increase in the gifting levels of companies & rising hotel & catering industry due to the next commonwealth games which are going to take place in India.g. Target Customers Based on the analysis of the Indian Tableware & Plastic storage container market. This approach expands distribution and allows the marketer to reach a wider market i. In case of dinnerware & plastic storage containers. number of working women is increasing who need plastic storage containers for themselves & their kids which are air-tight. For selling to domestic consumers at large.15.e. the target customers should be Corporate & Hotel/ Catering segment for gifting or as freebies for promoting their product and for personal usage. selling through company stores as well as multi brand outlets like Magppie sell their products through Multi brand outlets. shop -n-shop model where dedicated space in an outlet is provided to Magppie. In the direct distribution system.

image. Brand building & Promotion In order to build a brand in a new market. proper mix of advertisement through print media. it is easy to utilize the technical know-how of the existing manufacture as well as their patent/ trademarks.6. service standards. Value Chain It is very important for a new entrant to align all the activities in the value chain in accordance with the strategy adopted for selling their products in India & based on the need gaps faced by the consumers from the existing players. product guarantees. Thus.. it is very important that the product attributes are specified clearly not just to the consumers but internally within the organization & how these product attributes would help in satisfying the customer requirements. it is very important that the new entrant specifies & communicates about the quality they are offering. exhibitions etc. packaging and the way in which it is delivered is employed. schemes like scratch card. For an investor in the tableware & plastic storage containers market in India. 15. in order to establish the brand image of its product. how it is different from others & establish an image of credibility in the minds of consumer. in order to reinforce this image in the mind of customers. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 125 . Also. T.V.  Inbound Logistics & Operations – After having tie-ups with the existing players in India who are manufacturing products similar to the positioning of the products manufactured by a new entrant. Also.15. raw material acquisition would be easier from the existing suppliers in the Indian market. discounts etc. should be employed on occasions like Diwali etc. should be employed. Also. in order to successfully position the brand in consumer‘s mind it is important that proper mix of brand name.7.

Also.1. 16.500 tones per annum of opal glass tableware and 1.1. Direct Selling & Exclusive Outlets and expand the distribution channel based on the demand of people across various regions in India. Also. unbreakable & maintenance is easy and inexpensive. Thus. Profile of major players in tableware category 16.V.1 La Opala Company Profile  The Jharkhand plant of La Opala has a capacity to manufacture 3. they need to educate the customers about the differentiating features of their products and benefits they offer to the customers. a new entrant should focus upon Tableware category – Beverage Range & Dinnerware in Joint Venture or Merger & Acquisition with an existing player and ensure that the products are available across all geographies and address customer needs in terms of scratch free. Annexure 16. promotion schemes to attract customers during festive season can be incorporated and institutional players can be offered discounts based on bulk purchases. Thus.They can utilize the existing network along with the establishment of new methods of marketing like direct marketing as employed by Tupperware.com  Service – The products if offered with some guarantee or replacement warranty for a fixed period of time. they can utilize multiple channels of distribution – Retail. advertising on T.600 tones per annum of crystal ware under the brand name ‗Solitaire‘ INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 126 .  Marketing & Sales . Outbound Logistics – The new entrant can utilize the warehousing facility and distribution network of the existing player in the tableware & plastic storage containers market. on channels emphasizing on family shows and through web-sites like ebay.

Beverage range is the most fastest growing category amongst dinnerware. their last year sales were INR 600 million in the domestic market & exports worth INR 1. they target pharmaceutical companies & five star hotels They have a total of 85 distributors (multi brand) in the country. For institutional sales.      The margin they pay to distributors is 10% and dealer gets a margin of around 20-25% on the amount being sold by them They also sell their products through multi brand outlets where products are directly transported through their factory They imported bake ware from other countries worth INR 350 million in last year They use print media for advertising about their products & are planning to come on T.3000 o For upper middle class. They also have consumer schemes like scratch card. the product goes to dealers / retailers.e.1. 16. discounts etc. beverage & barware and bake ware They are targeting masses in India in the age group of 21-35 years for selling their products Their price range varies according to the target customers – o For masses – INR 1200 . INR 400 million are into dinnerware & INR 200 million into beverage & bar range They are growing at an average of 20-25% p.4 Billion Out of total sales worth INR 600 million.INR 2000 – 4000 o For higher class –INR 1000 for six glasses ( crystal ware)   For selling their products in institutional segment .       Another plant at Uttaranchal has production capacity of 4.V.000 tones per annum and manufactures opal glass tableware under the brand name ‗DIVA‘ La Opala has 10% market share in opal glass ware market i.2 Yera Company Profile INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 127 .a. they directly pitch in for customers. From distributors.

dinner sets. INR 850 million) in this market INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 128 . tumblers. They are into dinnerware & beverage range. mugs. 60% sales were among domestic consumers & 40% sales were among institutional & hotel/catering sector They have a total of 400 dealers across India & around 62 in North They sell their products through dealers/ distributors ( multi brand) to retailers For institutional sales . dinner sets etc.e. lemon sets. Gujarat with total production capacity of 165 tones per day. Tumblers are the fastest growing category amongst the products being manufactured by Yera (Shreno Pvt. Bharat Pottery Ltd. glasses.3.1. jugs.             The company has a manufacturing facility in Baroda. Platters.4% They manufacture plates. Company profile      They have a manufacturing facility in Jaipur with the production capacity of 2 lakh pieces per day They have a turnover of more than INR 1 billion last year They are into dinnerware and beverage & bar ware – plates. has a market share of 40% ( i. The company is No. cups & saucer. bowls etc. 1 in glass ware market. they have a direct sales team They promote their products through trade fair. They are utilizing their production capacity fully. exhibitions and advertising in print media They are importing Bar ware from China & Iran worth INR 200 million 16. Their market share in total glassware market of INR 12 Billion is 5. They have achieved sales of INR 20 million per month – highest amongst all ceramic ware companies The total market for ceramic tableware is INR 2130 million and Bharat Pottery Ltd.) They are targeting middle class people in India & price of products being manufactured by them lies in the range of INR 50 – 1000 Last year total turnover for Yera was INR 650 million out of which 90 % of the sales were in domestic market & 10% sales were in exports Out of the total domestic sales. Ltd.

000 units per month They are into the manufacturing of tableware .1.   They are growing at the rate of 15-20% per annum where ceramic tableware industry is growing at the rate of 5-10% Out of the total sales of Bharat Pottery Ltd. For institutional sales.4. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 129 . 25% are hotels/ catering & 20% are institutional segments      Their products lie in the price range of INR 4000 to INR 10000 ( dinner set) They have a total of 150 distributors in India distributed district wise They sell their products from distributors to small retailers. magazines and introduce promotional schemes to attract customers 16. where 55% are domestic customers .. 85% is sales in domestic market where as 15% sales come from exports In the domestic sales. They give advertisements in newspaper.00. Haryana They manufacture around 4. Art d’ inox Company Profile          Their manufacturing facility is located at Rohad . they have a sales team They also have tie-ups with multi brand outlets like Shoppers Stop. Pantaloons etc. 85% consist of dinner ware & 15% consist of beverage range . glass . Big Bazzar . serving ware . home accessories & office accessories They use steel with ceramics. wood & leather to manufacture these items They are targeting upper middle class Their product range starts from INR 300 -15000 Major portion of their sales come from corporate sales (60%) & from domestic sales (40%) Bar & beverage range contributes to around 50-55% of their total sales They have their own company stores to sell their products & also have distributors who sell to retailers (Multi brand outlets).

décor.1. to multi brand outlets . Profile of major players in Plastic storage container category 16. Nonstick Cookware items and Toothbrushes INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 130 .2. they have 10 stores of which seven are into retailing stainless steel products and three in modular kitchen They are planning to open 40 more stores in next 3-4 years They sell their products through Multi brand outlets. Magppie Company Profile    Their manufacturing facility is located at Kundli .5. Haryana They have a turnover of more than INR 1250 million They are into the manufacturing of dining. barware. Plastic Moulded Furniture. whereas industry is growing at 15% 20% p. they have a sales team to directly pitch in for corporate who purchase their products for gifting & five star hotels 16.a. For institutional sales.1 Cello Company Profile  CELLO Group are the manufacturers of Thermoware. shop -n-shop model where dedicated space in an outlet is provided to Magppie For channel sales i. through PR activities & CRM. Also. Vacuumware. they initiate special offers for customers 16. Household Plastic Items.e. beverage range.2. Dining & Barware are the fast growing categories whereas Décor is a slow growing category          They are presently growing at the rate of 35% p. Writing Instruments. they sell through distributors They promote their products through advertisements in print media.. tabletop accessories. exclusive boutiques.a. 60% comes from exports & 40% from domestic sales Presently. They are targeting upper middle class & institutional players Price range for their products start from INR 700 – INR 75000 Out of their total sales.

but in metro's they have 2-3 distributors /city. Tupperware Company Profile    They have their manufacturing facility in Hyderabad They offer products in plastic kitchenware which are classified as. Polypropylene & High tensile strength plastic as raw material The present sales turnover of CELLO has reached INR 3.plastic . protective shield.thermoware Their products are priced in the range of INR 2500 per unit of thermoware They sell it to distributor network who then sell to retailer and for selling through organized retail. They give extra benefit to dealers if the sales are more They are importing steel flasks from China & have tie-up with Italian brand & Thai brand ‗ENJOY‘ to manufacture the same with their name in India for 10 years 16. which is innovative. they directly sell through company warehouses They have 90 distributors who are exclusive distributor in this product category through out India.2. 000 – INR 0. They tend to avoid intermediaries & are planning to increase the number of distributors by adding on 100 distributors in next 1 .) and one in Pune.1 million per month Their products percentage break-up is 30% .2.Lunch boxes. Dry storage boxes . food preparation items & serving items They use Polypropylene ( cloudy view plastic) & Polycarbonate ( clear view plastic) as raw materials in the manufacturing of their products INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 131 . breakthrough product .Thermi Guard.T.         Cello has seven up-to-date manufacturing units in Daman (U. with latest molding machines and excellent infrastructure Cello has developed the unique.5 billion They are targeting middle & upper middle class to high income group having income class of above INR 25.2 years    They select those distributors who exhibit a good financial background and ability demonstrated in similar line of products for 4 – 6 years They have introduced dealer oriented activities rather than the usual promotion activities to sell their products. giving Cello an edge over rival products They use Polycarbonate . 70%. They have a distributor after every 100 kms.

M and undertake several below the line activities like kiosks in malls.   For institutional sales . school activities for students who use lunch boxes most often. Water Bottle. Vacuum flask. hence they are slow growing category. buckets. upper middle class & higher income group of annual income of INR 0.    Clear plastic products are more expensive.e. they target another segment of people i. They are already using F. they do advertising in women magazines and are venturing into TV. insulated and non . containers.5 million & above The products for these customers are in the price range starting from INR 2000 – INR 3000 like Barware INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 132 . & Silvassa have been awarded the ISO 9001 :2000 certification for successful implementation of Quality Management Systems Their products are targeted to the class of customers who are masses means lower middle class & some middle class pre dominantly due to the basic gifting nature of Indian culture The price of their products ranges from INR 300 – INR1000 Also. loyalty club for consumers who want to keep in touch with what is going on in Tupperware 16. Whereas cloudy plastic products are less expensive and fast growing category Their products are priced in the range of INR 145 for a container to INR 2500 for a dinner set They are targeting SEC A & SEC B women in the age group of 25 year onwards They have a direct selling team i. they have a direct selling team in the company For promoting their products. Water Jugs. They source their products from distributors.insulated Tiffin.e.      Milton's world-class plants in Pune. tubs etc. women who join as a consultant and after appointing six more consultants in their team.2. Hamilton Company Profile    Milton is one of the oldest players within the organized plastic Industry in India Milton developed its own technology and technical know-how and pioneered the Thermoware segment Milton has over 350 key selling items in its product basket ranging from Casserole. they become managers.3. Soft thermoware items & regular household items like trays.

mini metro . Marketing takes place through distributors (more than 200) present in every metro. big towns . mini towns in India INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 133 .

the Importer. For import of items appearing in the restricted list you. The full cost and risk involved in bringing the goods from this place to the desired destination will be borne by the buyer. not appearing in Prohibited list or restricted list can be imported freely without any import license. has give detailed definition of a few standard terms popularly known as 'INCO TERMS'. These terms thus represents the minimum obligation for the seller. the overseas suppliers normally quote the terms prevailing in international trade. Principal Law & Import Export Policy Principal Law Imports in India are governed by the Foreign Trade (Development & Regulation) Act 1992. It is mostly used for sale of plantation commodities such as tea. In exercise of the powers conferred by the Foreign Trade (Development & Regulation) Act 1992 items. To avoid ambiguity in interpretation of such terms. Under this Act. should be fully conversant with the mode of pricing and the manner of payment for the imports.1. 16. coffee and cocoa.3. The importer for his benefits should know the meaning of the technical terminology. Paris. need to secure an import license. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 134 . International Chamber of Commerce.3. Importers need an Importers/Exporters Code Number from the Directorate General of Trade in order to be able to import 16.16. Mode of Pricing and INCO TERMS While finalizing the terms of import contract. A large number of Consumer goods are freely importable without license. the Government of India has liberalized the Import Policy and practically all Controls on imports have been lifted.3. These terms have almost universal acceptance and are explained below: Ex-work 'Ex-work' means that the seller's responsibility is to make the goods available to the buyer at works or factory. imports of all goods are Free except for the items regulated by the policy or any other law for the time being in force.2. Import Legislation in India With the globalization of the Indian economy and consequent upon comfortable balance of payments position. Imports may be made freely except to the extent they are regulated by the provisions of Import Policy or by any other law for the time being in force. As regards mode of pricing.

Cost and Freight (C & F) The seller must on his own risk and not as an agent of the buyer. As will be seen though the seller bears the cost of carriage to the named destination. Free Alongside Ship (FAS) Once the goods have been placed alongside the ship. Customs Duty Customs duty is levied under the Customs Act. 1975. free of cost to the buyer at a port of shipment named in the sales contract. the risk is already transferred to the buyer at the port of shipment itself. Customs duty on imports comprises the following:    Basic Customs Duty Additional Customs duty in lieu of excise duty Additional duty of customs to countervail state taxes/VAT 135 INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY . Free on Board (FOB) The sellers‘ responsibility ends the moment the contracted goods are placed on board the ship. 16. the seller's obligations are fulfilled and the buyer notified. The buyer has to bear all costs and risks of loss or damage to the goods hereafter.3. The rates of customs duty are laid down in the Customs Tariff Act. The buyer has to contract with the sea carrier for the carriage of the goods to the destination and pay the freight. This being a shipment contract. Such B/L if issued must be converted into 'Shipped on Board B/L' by using the stamp 'Shipped on Board' and must bear signature of the carrier or his authorized representative together with date on which the goods were 'boarded'. contract for the carriage of the goods to the port of destination named in the sale contract and pay the freight. 'On board' means that a Received for Shipment' Bill of Lading is not sufficient. Cost Insurance Freight (CIF) The term is the same as C & F but with the addition that the seller has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage.Free on Rail (FOR)/Free on Truck (FOT) These terms are used when the goods are to be carried by rail. but they are also used for road transport. 1962 on the import of goods into India. the point of delivery is fixed to the ship's rail and the risk of loss or of damage to the goods is transferred from the seller to the buyer at that very point. The seller's obligations are fulfilled when the goods are delivered to the carrier.3.

are subject to an effective customs duty rate of 36.) are available for import of specified products such as IT products or for imports under specific schemes and projects. additional duty in lieu of and additional duty of 4 % in lieu of sales tax/VAT payable on the sale of goods is also applicable on the imported goods. Sri Lanka.5 %. Further certain exemptions/concessions (drawback of duties. INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 136 . and South Asian Association for Regional Cooperation (SAARC) countries and Singapore to promote preferential tariffs for certain identified goods. Similar trade agreements with ASEAN. which have a basic customs duty rate of 12. with most products being charged duty at a rate of 12. Mercosur countries and the European Union are also on the anvil. Education Cess The general rate of basic customs duty ranges between 0 % and 20 %. imported goods. However. 2 % education cess is also charged on the aggregate customs duties. The government of India has entered into a number of free trade agreements with trade partners like Thailand. Certain specified categories of goods are exempt from this levy in accordance with commitments under the WTO.5%.74 % because of the additional duties. Thus. benefit under export promotion capital goods scheme etc. The primary basis for the valuation of goods under the Indian customs law is the transaction value. In addition.

. Gurgaon d) Milton Global Ltd ( Hamilton). Mumbai g) Living in Style. References Primary Research In-depth interviews were conducted with following categories of organizations 1. Ltd. Co.17. Mumbai b) Style Spa Furniture Ltd. Delhi f) Art d'Inox. Mumbai INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 137 . Delhi 2. Mumbai b) Home Stop. Delhi l) Big Bazaar . Delhi i) Bharat Bonechina. Manufacturers & Retailers a) Godrej & Boyce Mfg.. Mumbai h) Magpie International Ltd. Delhi j) Tupperware India. Delhi g) Cello Thermoware Ltd. Mumbai e) House full International Ltd. Mumbai d) Furniture Bazaar. Mumbai f) Fine Living – Wooden Furniture and Interior Concept. Chennai i) Shudhda Impex. Mumbai e) La Opala RG Ltd. Retailers and Importers a) Durian Furniture.. Mumbai c) Home Town. Gurgaon k) Yera.Future Group. Mumbai h) Noritake. Delhi c) Evok (HHRL).

Chennai 6. USA. Furniture Market and Opportunities. Indo Italian Chamber of Commerce. CSIL Report 4. Mumbai (2) 3. Delhi (2) 2. Frost & Sullivan Report INVESTMENT POTENTIAL IN INDIAN HOME UTILITY & FURNISHING INDUSTRY 138 .Imports 3. Report on Furniture Industry in India. Hyderabad 7. Kolkata 4. A Strategic Supply Side Analysis of Indian Exporters of Plastic Consumer Products. Delhi Nine Focus Group Discussions were also conducted to obtain consumer insights for the identified product categories. Ahmedabad 5. Bangalore Secondary Research Sources 1. IBEF Report 3. Industry Associations a) EPCH – Exports Promotion Council for Handicrafts. India 2. These were conducted across following cities 1. The World Furniture Outlook. D&B Report 6. EPCH Country Study. Market feasibility study and Business development plan for the Handicrafts sector. Frost & Sullivan Report 5.

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